The effects of fiscal policy in a neoclassical growth model

Michael Dotsey and Ching Sheng Mo

No 94-03, Working Paper from Federal Reserve Bank of Richmond

Abstract: This paper studies the effects of fiscal policies--depicted as stochastic changes in government spending and distortionary tax rates--when the government is constrained from using lump sum taxes for achieving intertemporal budget balance. The ratio of debt to gnp, therefore, has consequences for the future choices of government spending and distortionary taxation and hence affects real economic activity. Further modeling fiscal policy in this way generates results that differ substantially from those in standard stochastic models where lump sum taxes are used for budget balance. The modeling of fiscal policy presented here is also consistent with empirical evidence on U.S. fiscal policy.

Keywords: Fiscal; policy (search for similar items in EconPapers)
Date: 1994
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.richmondfed.org/publications/research/w ... /1994/pdf/wp94-3.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.richmondfed.org/publications/research/working_papers/1994/pdf/wp94-3.pdf [301 Moved Permanently]--> https://www.richmondfed.org/publications/research/working_papers/1994/pdf/wp94-3.pdf)

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:fip:fedrwp:94-03

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().