Endogenous Business Cycles and Systematic Stabilization Policy

Arbeitspapier

We study the effects of fiscal policy rules on the determinacy of rational expectations equilibrium in a perfectly competitive monetary model with constant returns. Government spending implies a distortion of the monetary steady state due to the implied taxation. We show that policy rules that let the GNP share of government spending sufficiently negatively on increases in GNP stabilize the economy with respect to endogenous fluctuations for arbitrarily little distortion of the steady state of which stabilization occurs. The rules do not involve lump sum taxation, negative income taxation, or exact knowledge of the economy's laissez faire steady state. (JEL E32 and E63 - Keywords: Endogenous business cycles, stabilization policy - Running title: Endogenous Fluctuations and Stabilization Policy)

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: EPRU Working Paper Series ; No. 2002-15

Classification and Topics

• Classification: Wirtschaft
• Subject: Monetäre Wachstumstheorie ; Konjunkturtheorie ; Finanzpolitik ; Regelbindung ; Globalsteuerung ; Rationale Erwartung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Aloi, Marta ; Lloyd-Braga, Teresa ; Whitta-Jacobsen, Hans Jørgen
• Event: Veröffentlichung
• (who): University of Copenhagen, Economic Policy Research Unit (EPRU)
• (where): Copenhagen
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/82030
• Last update: 10.03.2025, 11:44 AM CET