Arbeitspapier
Borrow and Adjust: Fiscal Policy and Sectoral Adjustment in an Open Economy
Should the government run fiscal deficits in response to an adverse external shock that warrants transfer of resources from production of non-traded to traded goods? This paper considers normative fiscal policy implications of sectoral adjustment costs in a two-sector model with overlapping generations. Fiscal deficits benefit present generations by depleting foreign assets and slowing down the adjustment process. We show that despite no nominal rigidities, temporary fiscal deficits increase social welfare if adjustment costs prevent immediate sectoral reallocation of inputs. If there are no adjustment costs, the case for fiscal deficits vanishes.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 583
- Klassifikation
-
Wirtschaft
- Thema
-
fiscal policy
sectoral adjustment
intergenerational welfare
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Steigum, Erling
Thøgersen, Øystein
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2001
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Steigum, Erling
- Thøgersen, Øystein
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2001
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