The multiplier in a small open economy two-agent New Keynesian model under alternative tax financing methods

Yongseung Jung

Macroeconomic Dynamics, 2025, vol. 29, -

Abstract: This paper sets up a small open economy two-agent model and addresses the size of output multiplier of government spending associated with taxation either on constrained households or on unconstrained households. The paper shows that the tax financing rule matters to real resource allocations in the small open economy with flexible prices and equal tax burden at the steady state, contrasting to the finding of Monacelli and Perotti (2011) in closed economies. The output multiplier in open economies is larger than the multiplier in closed economies when taxes are levied on constrained households, while the reverse holds under taxations on unconstrained households.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

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:cup:macdyn:v:29:y:2025:i::p:-_121

Access Statistics for this article

More articles in Macroeconomic Dynamics from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().