Fiscal Policy and the Nominal Term Premium

Lorant Kaszab and Aleš Maršál

No E2013/13, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: Distortionary income taxation in a standard New Keynesian model substantially increases the nominal term-premium on long-term bonds relative to a model with lumpsum taxes. Also the empirical level of the nominal term premium can be matched with lower risk-aversion coefficient in case of a model with income taxes relative to a model with long-run inflation risks.

Keywords: zero-coupon bond; nominal term premium; third-order approximation; distortionary income taxation (search for similar items in EconPapers)
JEL-codes: E13 E31 E43 E44 E62 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2013-11
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Fiscal Policy And the Nominal Term Premium (2022)
Working Paper: Fiscal Policy and the Nominal Term Premium (2019)
Working Paper: Fiscal Policy and the Nominal Term Premium (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2013/13

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