FISCAL POLICY WITH LIMITED-TIME COMMITMENT

• 成果类型: Article
• 署名作者: Clymo, Alex; Lanteri, Andrea
• 署名单位: University of Essex; Duke University
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/uez066
• 发表日期: 2020
• 页码: 623-652
• 关键词: Optimal taxation; monetary-policy; DISCRETION; rules; INVESTMENT; MODEL

摘要

We propose a theory of optimal fiscal policy with 'Limited-Time Commitment'. In our framework, successive governments have commitment only over finite, overlapping horizons. We first show that key results in the 'Full Commitment' literature can often be sustained with a single period of commitment. We then solve a calibrated model in which 'Limited-Time Commitment' fails to implement the 'Full Commitment' policy, and find that one year (three years) of commitment recovers one-third (two-thirds) of the welfare losses relative to 'No Commitment'. Finally, we investigate the trade-off between commitment and flexibility in response to shocks.