Budgetary policies in a DSGE model with finite horizons

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• 作者：Barbara Annicchiarico^a ; ^{barbara.annicchiarico@uniroma2.it} ; Nicola Giammarioli^b ; ^{ngiammarioli@imf.org} ; Alessandro Piergallini^a ; ^{alessandro.piergallini@uniroma2.it}
• 关键词：Fiscal policy ; Monetary policy ; Nominal rigidities ; Capital accumulation ; Finite horizons ; Simulations
• 刊名：Research in Economics
• 出版年：2012
• 出版时间：June, 2012
• 年：2012
• 卷：66
• 期：2
• 页码：111-130
• 全文大小：558 K

文摘

This paper presents a dynamic stochastic general equilibrium model with nominal rigidities, capital accumulation and finite horizons. Our New Keynesian framework exhibits intergenerational wealth effects and is intended to investigate the macroeconomic implications of fiscal policy, which is specified by either a debt-based tax rule or a balanced-budget rule allowing for temporary deficits. The model predicts that fiscal expansions generate a trade-off in output dynamics between short-term gains and medium-term losses. It is shown that the effects of fiscal shocks crucially depend upon the conduct of monetary policy. Simulation analysis suggests that balanced-budget requirements enhance the determinacy properties of feedback interest rate rules by guaranteeing inflation stabilization.