Balanced-budget rules and macroeconomic (in)stability

• 成果类型: Article
• 署名作者: Guo, JT; Harrison, SG
• 署名单位: University of California System; University of California Riverside; Columbia University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2004.02.002
• 发表日期: 2004
• 页码: 357-363
• 关键词: balanced-budget rules; indeterminacy; business cycles

摘要

It has been shown that under perfect competition and constant returns-to-scale, a one-sector real business cycle model may exhibit indeterminacy and sunspots when income tax rates are determined by a balanced-budget rule with a pre-set level of government expenditures. This paper shows that indeterminacy disappears if the government finances endogenous public spending and transfers with fixed income tax rates. Under this type of balanced-budget formulation, the economy exhibits saddle-path stability and equilibrium uniqueness, regardless of the source of government revenue and/or the existence of lump-sum transfers. (C) 2004 Elsevier Inc. All rights reserved.