Fiscal policy with heterogeneous agents and incomplete markets

• 成果类型: Article
• 署名作者: Heathcote, J
• 署名单位: Georgetown University
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1111/0034-6527.00328
• 发表日期: 2005
• 页码: 161-188
• 关键词: liquidity constraints; life-cycle; consumer response; household consumption; borrowing constraints; idiosyncratic risk; UNITED-STATES; public debt; income; INEQUALITY

摘要

I undertake a quantitative investigation into the short run effects of changes in the timing of proportional income taxes for model economies in which heterogeneous households face a borrowing constraint. Temporary tax changes are found to have large real effects. In the benchmark model, a temporary tax cut increases aggregate consumption on impact by around 29 cents for every dollar of tax revenue lost. Comparing the benchmark incomplete-markets model to a complete-markets economy, income tax cuts provide a larger boost to consumption and a smaller investment stimulus when asset markets are incomplete.