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Author Javier Andrés, A. ♦ R. Doménech, A. ♦ C. Leith, B.
Source CiteSeerX
Content type Text
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Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Abstract In this paper we analyse the stabilisation properties of distortionary taxes in a New Keynesian model with overlapping generations of finitely-lived consumers. In this framework, government debt is part of net wealth and this adds a number of interesting channels through which fiscal policy could affect output and inflation. Output volatility, in presence of technology shocks, is not substantially affected by the operation of automatic stabilisers but we find interesting composition effects. While the presence of finitely-lived households strengthens the stabilisation performance of distortionary taxes through the reduction of the volatility of consumption, it does so at the cost of more volatile investment and real money balances. Keywords: Non-Ricardian consumers, macroeconomic stability, distortionary taxes. JEL Classification: E21, E32, E63. 1.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Learning Resource Type Article