Government deficits in large open economies: The problem of too little public debt

Willem Buiter and Anne C. Sibert

No 2015-59, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Large and growing levels of public debt in the United States, United Kingdom, Japan and the Euro Area raise new interest in the cross-country effects of a large open economy's deficits. The authors consider a dynamic optimising model with costly tax collection and exogenously given public spending and initial debt. They ask whether the externalities associated with an individual country's deficits are positive or negative. They characterise the path of taxes in the Nash equilibrium where policy makers act nationalistically and compare this outcome to the global optimal outcome.

Keywords: fiscal policy; international policy coordination; optimal taxation (search for similar items in EconPapers)
JEL-codes: E62 F42 H21 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-dge, nep-fdg, nep-mac and nep-opm
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https://www.econstor.eu/bitstream/10419/115361/1/834226901.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201559

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