Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159363
Authors: 
Cellini, Roberto
Lambertini, Luca
Year of Publication: 
2004
Series/Report no.: 
Quaderni - Working Paper DSE 522
Abstract: 
This paper revisits a well-known case of optimal fiscal policy in a Ramsey model where consumer utility is defined over consumption and public goods. We show that normalising the size of the population to one eliminates the scope for active policy-making since the decentralised equilibrium coincides with social planning. Then, we modify the model to allow for a population of N > 1 agents, whereby restoring the role of the government as a policymaker. Both in the Stackelberg case and in the decentralised game, we prove that optimal fiscal policy and consumption are not only time consistent but also subgame perfect.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

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