Optimal Fiscal Action in an Economy with Sovereign Premia and without Monetary Independence: An Application to Italy

Apostolis Philippopoulos, Petros Varthalitis () and Vanghelis Vassilatos ()

No 4199, CESifo Working Paper Series from CESifo

Abstract: We welfare rank various tax-spending policies. The setup is a New Keynesian model of a semi-small open economy featuring sovereign risk premia and loss of monetary policy independence. The model is calibrated to match data from the Italian economy 2001-2011. We compute various optimized state-contingent tax-spending policy rules when the policy aim is shock stabilization and/or debt consolidation.

Keywords: feedback policy rules; New Keynesian; sovereign premia (search for similar items in EconPapers)
JEL-codes: E60 F30 H60 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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