Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/23239 
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dc.contributor.authorOcchino, Filippoen
dc.date.accessioned2009-01-29T15:51:55Z-
dc.date.available2009-01-29T15:51:55Z-
dc.date.issued2005-
dc.identifier.urihttp://hdl.handle.net/10419/23239-
dc.description.abstractHow should taxes, government expenditures, the primary and fiscal surpluses andgovernment liabilities be set over the business cycle? We assume that the governmentchooses expenditures and taxes to maximize the utility of a representative household,utility is increasing in government expenditures, only distortionary labor income taxesare available, and the cycle is driven by exogenous technology shocks. We first considerthe commitment case, and characterize the Ramsey equilibrium. In the case that theutility function is constant elasticity of substitution between private and public con-sumption and separable between the composite consumption good and leisure, taxes,government expenditures and the primary surplus should all be constant positive frac-tions of production, and both government liabilities and the fiscal surplus should bepositively correlated with production. Then, we relax the commitment assumption,and we show how to determine numerically whether the Ramsey equilibrium can besustained by the threat to revert to a Markov perfect equilibrium. We find that, forrealistic values of the preferences discount factor, the Ramsey equilibrium is sustain-able.Keywords: Fiscal policy, Commitment, Time-consistency, Ramsey equilibrium, Markovperfect equilibria, Sustainable equilibria.en
dc.language.isoengen
dc.publisher|aRutgers University, Department of Economics |cNew Brunswick, NJen
dc.relation.ispartofseries|aWorking Paper |x2005-02en
dc.subject.jelE62en
dc.subject.ddc330en
dc.subject.keywordFiscal policyen
dc.subject.keywordCommitmenten
dc.subject.keywordTime-consistencyen
dc.subject.keywordRamsey equilibriumen
dc.subject.keywordMarkov perfect equilibriaen
dc.subject.keywordSustainable equilibriaen
dc.subject.stwFinanzpolitiken
dc.subject.stwÖffentliche Ausgabenen
dc.subject.stwKonjunkturen
dc.subject.stwEinkommensteueren
dc.subject.stwOptimale Besteuerungen
dc.subject.stwTheorieen
dc.titleOptimal fiscal policy over the business cycle-
dc.typeWorking Paperen
dc.identifier.ppn493714650en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:rut:rutres:200502en

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