Optimal Taxation with Endogenous Default under Incomplete Markets

• 成果类型: Article
• 署名作者: Pouzo, Demian; Presno, Ignacio
• 署名单位: University of California System; University of California Berkeley; Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20160101
• 发表日期: 2022
• 页码: 1-41
• 关键词: Sovereign default; optimal maturity; interest-rates; fiscal-policy; debt; fluctuations; ECONOMY

摘要

How are the optimal tax and debt policies affected if the government can default on its debt? We address this question from a normative perspective in an economy with noncontingent government debt, domestic default, and labor taxes. On one hand, default prevents the government from incurring future tax distortions associated with servicing the debt. On the other hand, default risk gives rise to endogenous credit limits that hinder the government???s ability to smooth taxes. We characterize the fiscal policy and show how the option to default alters the near???unit root component of taxes in the economy with risk-free borrowing. (JEL D52, E62, H21, H24, H63)