Equilibria Under Monetary and Fiscal Policy Interactions with Distortionary Taxation

Baruch Gliksberg ()
Additional contact information
Baruch Gliksberg: Department of Economics, University of Haifa

No WP2014/4, Working Papers from University of Haifa, Department of Economics

Abstract: This paper studies how the presence of an income tax changes the properties of general equilibrium models. It fi nds that relative to the previous literature [following Leeper (1991)] a new area of determinacy exists where a passive fiscal rule combined with a passive monetary rule can still deliver determinacy where the same area of the parameter space would lead to multiple solutions if taxes were lump sum. It characterizes analytically the extent to which tax cuts are self financing and how the distortionary tax Laffer curve looks near the steady state in order to obtain the size of the passive fiscal-passive monetary regime. In this regime, scal limits bring about a Tobin effect and nominal prices are determined according to the quantity theory of money.

Keywords: Distorting Taxes; Dynamic Laffer Curve; Equilibrium Determinacy (search for similar items in EconPapers)
JEL-codes: C60 E60 H60 (search for similar items in EconPapers)
Pages: 54
New Economics Papers: this item is included in nep-dge, nep-mac, nep-mon, nep-pbe and nep-pub
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hevra.haifa.ac.il/econ/wp_files/wp201404.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:haf:huedwp:wp201404

Access Statistics for this paper

More papers in Working Papers from University of Haifa, Department of Economics 199 Aba Khoushy Ave., Mount Carmel, Haifa, Israel, 3498838. Contact information at EDIRC.
Bibliographic data for series maintained by Anna Rubinchik ().