A note on optimal fiscal policy in an economy with private borrowing limits

Marina Azzimonti and Pierre Yared

Economics Letters, 2017, vol. 151, issue C, 62-65

Abstract: We consider the implications for optimal fiscal policy when taxes are non-distortionary and households are heterogeneous and borrowing constrained. The main result is that optimal policy keeps some households borrowing constrained in order to reduce interest rates on government debt.

Keywords: Optimal taxation; Debt management; Income distribution (search for similar items in EconPapers)
JEL-codes: E25 H21 H63 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:151:y:2017:i:c:p:62-65

DOI: 10.1016/j.econlet.2016.12.007

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