OPTIMAL FISCAL AND MONETARY POLICY IN A BAUMOL-­TOBIN MODEL

Benjamin Eden ()

No 1995.01, Bank of Israel Working Papers from Bank of Israel

Abstract: When the government uses bonds to smooth tax distortions agents must use bonds to smooth consumption. This is not efficient because smoothing by bonds requires more real resources than smoothing by money. At the social optimum only money is used. This can be achieved by contracting a monetary aggregate which includes government deposits at the central bank, at a constant rate. Unlike models which allow a costless trip to the asset market at the beginning of each period, here the rate of change in the monetary base fluctuates over time.

Pages: 40 pages
Date: 1995-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_1995.01.pdf First version, 1995 (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:boi:wpaper:1995.01

Access Statistics for this paper

More papers in Bank of Israel Working Papers from Bank of Israel Contact information at EDIRC.
Bibliographic data for series maintained by Yossi Yakhin ().