EconPapers    
Economics at your fingertips  
 

Time-varying Consumption Tax, Productive Government Spending, and Aggregate Instability

Mauro Bambi () and Alain Venditti ()

Working Papers from HAL

Abstract: In this paper we investigate if government balanced-budget rules together with endogenous taxation may lead to aggregate instability in an endogenous growth framework. After highlighting the differences with the exogenous growth framework, we prove that under counter-cyclical consumption taxes, while there exists a unique balanced growth path, sunspot equilibria based on self-fulfilling expectations occur through a form of global indeterminacy. In addition, we argue that this result is empirically plausible for a large set of OECD countries and that it may also emerge with endogenous income taxes.

Keywords: sunspot equilibria; self-fulfilling expectations; global indeterminacy; time-varying consumption tax; endogenous growth (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2018-10
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01934819
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://halshs.archives-ouvertes.fr/halshs-01934819/document (application/pdf)

Related works:
Working Paper: Time-varying Consumption Tax, Productive Government Spending, and Aggregate Instability (2018) Downloads
Working Paper: Time-varying Consumption Tax, Productive Government Spending, and Aggregate Instability (2016) Downloads
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:hal:wpaper:halshs-01934819

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2019-04-13
Handle: RePEc:hal:wpaper:halshs-01934819