Future fiscal and budgetary shocks

• 成果类型: Article
• 署名作者: Hoon, Hian Teck; Phelps, Edmund S.
• 署名单位: Singapore Management University; Columbia University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2006.12.008
• 发表日期: 2008
• 页码: 499-518
• 关键词: Future shocks; Business assets; EMPLOYMENT

摘要

We study the effects of future tax and budgetary shocks in a non-monetary and possibly non-Ricardian economy. An (unanticipated) temporary labor tax cut to be effective on a given future date-a delayed debt bomb-causes at once a drop in the (unit) value placed on the firms' business asset, the customer, with the result that share prices, the hourly wage, and employment drop in tandem. This paradox of reduced activity through announcement of future stimulus does not hinge on an upward jump of long interest rates. A future tax-rate cut lacking a sunset provision has the same negative effects. (C) 2008 Elsevier Inc. All rights reserved.