Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27750
Authors: 
Mayer, Eric
Stähler, Nikolai
Year of Publication: 
2009
Series/Report no.: 
Discussion Paper Series 1: Economic Studies 2009,24
Abstract: 
In a New Keynesian DSGE model with non-Ricardian consumers, we show that automatic stabilization according to a countercyclical spending rule following the idea of the debt brake is well suited both to steer the economy and in terms of welfare. In particular, the adjustment account set up to record public deficits and surpluses serves well to keep the level of government debt stable. However, it is essential to design its feedback to government spending correctly, where discretionary lapses should be corrected faster than lapses due to estimation errors.
Subjects: 
Fiscal policy
debt brake
welfare
dsge
JEL: 
E32
G00
E62
ISBN: 
978-3-86558-552-3
Document Type: 
Working Paper

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