Fiscal Policy Interdependence and Efficiency

Willem Buiter and Kenneth Kletzer

No 419, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper uses a two-country overlapping generations model to study the international transmission of fiscal policy among open interdependent economies under free international capital mobility. With only lump-sum taxes and transfers, international transmission involves only pecuniary externalities: barring dynamic inefficiency, only distributional issues (intergenerational and international) are involved. With age-specific taxes and transfers, the ability to run deficits and issue debt does not enhance the choice set of the governments. Source-based taxes on the rentals from capital and residence-based taxes on all property income are also studi.

Keywords: Capital Mobility; Fiscal Policy; Policy Coordination (search for similar items in EconPapers)
Date: 1990-05
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Related works:
Working Paper: FISCAL POLICY INTERDEPENDENCE AND EFFICIENCY (1990)
Working Paper: Fiscal Policy Interdependence and Efficiency (1990)
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