Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68495
Authors: 
Bianconi, Marcelo
Fisher, Walter H.
Year of Publication: 
2011
Series/Report no.: 
Reihe Ökonomie, Institut für Höhere Studien 271
Abstract: 
We analyze the role of government intertemporal budget policies in a growing open economy including nominal assets in the presence of an upward sloping supply of debt. This introduces transitional dynamics that influence the effects of government policy instruments on the long term fiscal liability. In particular, shifts in capital income taxes can lead to dynamic scoring effects through the evolution of foreign debt. We show that a combination of tax-cum-expenditure, or government expenditure alone can balance the long term government budget constraint. However, for certain combinations of parameter values, the capital income tax alone cannot balance the intertemporal budget.
Subjects: 
government budget constraint
nominal assets
capital income tax
JEL: 
E5
E6
F4
Document Type: 
Working Paper

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