Journal ArticleDOI
Fiscal policy, debt constraint and expectations-driven volatility
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In this paper, the authors show that the intertemporal budget constraint of the government can be a fundamental source of indeterminacy, and therefore, of expectations-driven fluctuations, and that this is promoted by a larger ratio of debt over GDP.About:
This article is published in Journal of Mathematical Economics.The article was published on 2015-12-01. It has received 17 citations till now. The article focuses on the topics: Internal debt & Debt ratio.read more
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Market Distortions and Local Indeterminacy: A General Approach
TL;DR: It is found that distortions in the capital market, per se, do not play a major role and it is shown that, for empirically plausible values of elasticity of substitution between inputs, indeterminacy requires a minimal degree of distortions.
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Growth and Public Debt: What Are the Relevant Tradeoffs?
TL;DR: In this article, the interplay between growth and public debt is addressed considering a Barro-type [1] endogenous growth model where public spending is financed through taxes on income and private debt.
Journal ArticleDOI
Comparing recursive equilibrium in economies with dynamic complementarities and indeterminacy
TL;DR: In this article, a multistep monotone map approach is developed to characterize minimal state-space recursive equilibrium for a broad class of infinite horizon dynamic general equilibrium models with positive externalities, dynamic complementarities, public policy, equilibrium indeterminacy, and sunspots.
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Endogenous labour supply, endogenous lifetime and economic development
Luca Gori,Mauro Sodini +1 more
TL;DR: In this paper, the authors developed a theory to explain economic development in a neoclassical growth model under the assumption of gross substitutability between consumption and leisure, where the initial condition of a macroeconomy (history) and expectation-driven coordination failures (indeterminacy) become alternative explanations of long-term demoeconomic outcomes of nations.
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Growth and Public Debt: What Are the Relevant Trade‐Offs?
TL;DR: In this paper, the interplay between growth and public debt is addressed considering a Barro-type [1] endogenous growth model where public spending is financed through taxes on income and private debt.
References
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Journal ArticleDOI
Indeterminacy and stabilization policy
TL;DR: In this paper, an income tax schedule that exhibits a progressivity feature can ensure saddle path stability in such a framework and thereby stabilize the economy against sunspot fluctuations, whereas an economy with a flat or regressive tax schedule is more susceptible to indeterminacy.
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Capital–Labor Substitution and Competitive Nonlinear Endogenous Business Cycles☆
TL;DR: In this article, a simple geometrical method was developed to study local indeterminacy, bifurcations, and stochastic (sunspot) equilibria near a steady state, in nonlinear two dimensional economic models.
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Debt policy rule, productive government spending, and multiple growth paths
TL;DR: In this article, the authors construct an endogenous growth model with productive government spending, where the government can finance its costs through income tax and government debt and has a target level of government debt relative to the size of the economy.
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An endogenous growth model with public capital and sustainable government debt
TL;DR: In this paper, the authors present and analyse an endogenous growth model with public capital and public debt, assuming that the ratio of the primary surplus to gross domestic income is a positive linear function of the debt income ratio.
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Balanced Budget Rules and Aggregate Instability: The Role of Consumption Taxes*
TL;DR: In this article, the authors show that when the government finances its expenditures via an endogenous consumption tax instead, a steady state is always saddle-path stable, and that combining income taxes with consumption taxes makes the ranges of indeterminacy shrink.