Bitte verwenden Sie diesen Link, um diese Publikation zu zitieren, oder auf sie als Internetquelle zu verweisen: https://hdl.handle.net/10419/55571 
Erscheinungsjahr: 
2006
Schriftenreihe/Nr.: 
Working Papers No. 06-9
Verlag: 
Federal Reserve Bank of Boston, Boston, MA
Zusammenfassung: 
We study a small open economy characterized by two empirically important frictions- incomplete financial markets and an inability of the government to commit to policy. We characterize the best sustainable fiscal policy and show that it can amplify and prolong shocks to output. In particular, even when the government is completely benevolent, the government's credibility not to expropriate capital varies endogenously with the state of the economy and may be scarcest during recessions. This increased threat of expropriation depresses investment, prolonging downturns. It is the incompleteness of financial markets and the lack of commitment that generate investment cycles even in an environment where first-best capital stock is constant.
JEL: 
C91
C93
D01
D64
Dokumentart: 
Working Paper

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