Supply-side reforms and learning dynamics

• 成果类型: Article
• 署名作者: Giannitsarou, C
• 署名单位: University of Cambridge
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2004.10.011
• 发表日期: 2006
• 页码: 291-309
• 关键词: supply-side reforms; Transition dynamics; adaptive learning

摘要

This paper studies the nature, the magnitude and the length of the transition after a capital tax cut. The transition is analysed with adaptive learning, under which agents do not need to adjust instantaneously to the change, as with rational expectations (RE). Impulse response analysis reveals that the transition with learning is asymmetrically sensitive to the nature of the exogenous technological shock at the time of the reform. If the reform coincides with a negative shock, the transition to the new steady state is slow, whereas, if it coincides with a positive shock, it is approximately the same as the one predicted by RE. The results imply that cutting capital income taxes before or during a recession may not be an effective means for short-run fiscal stimulus. (c) 2005 Elsevier B.V. All rights reserved.