Aggregate Stability in Monetary Economy with Consumption Tax and Taylor Rule

Seiya Fujisaki

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze aggregate stability of a monetary economy with an interest-rate control type of monetary policy and endogenous consumption tax rate under balanced-budget rule, in terms of equilibrium determinacy. We find the effect of the response to income in monetary policy on macroeconomic stability depends on whether the consumption tax rate is adequately high.

Keywords: aggregate stability; endogenous consumption tax rate; Taylor rule. (search for similar items in EconPapers)
JEL-codes: E52 E62 (search for similar items in EconPapers)
Date: 2016-03-03
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:69833

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