Optimal fiscal policy under multiple equilibria

• 成果类型: Article
• 署名作者: Ennis, HM; Keister, T
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Richmond; Instituto Tecnologico Autonomo de Mexico
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2004.08.006
• 发表日期: 2005
• 页码: 1359-1377
• 关键词: Coordination problems; equilibrium selection; search and matching; taxation

摘要

We study optimal fiscal policy in an economy where (i) search frictions create a coordination problem and generate multiple, Pareto-ranked equilibria and (ii) the government finances the provision of a public good by taxing market activity. The government must choose the tax rate before it knows which equilibrium will obtain, and therefore an important part of the problem is determining how the policy will affect the equilibrium selection process. We show that when the equilibrium selection rule is based on the concept of risk dominance, higher tax rates make coordination on the Pareto-superior outcome less likely. As a result, taking equilibrium-selection effects into account leads to a lower optimal tax rate. (c) 2005 Elsevier B.V. All rights reserved.