Quantifying tax effects under policy foresight
In: Journal of Monetary Economics, Band 52, Heft 8, S. 1557-1568
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In: Journal of Monetary Economics, Band 52, Heft 8, S. 1557-1568
In: IMF Working Papers
This paper studies the effects of government spending under limited international capital mobility, as featured by most developing countries. While external financing of government debt mitigates the crowding-out effect, it generates real appreciation, which contracts traded output and lowers the fiscal multiplier in the short run. The decline of the multiplier is larger when facing debt-elastic country risk premia. Also, government spending is more expansionary with more home bias in government purchases, more sectoral rigidities, and a less flexible exchange rate. Whether the twin-deficit hy
In: IMF Working Paper No. 20/91
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In: Journal of Monetary Economics, Band 98, S. 11-26
In: IMF Working Paper No. 12/129
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In: IMF Working Papers, S. 1-46
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In: NBER Working Paper No. w12103
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In: IMF Working Papers
This paper studies fiscal policy effects in developing countries with external debt and sovereign default risks. State-dependent distributions of fiscal limits are simulated based on macroeconomic uncertainty and fiscal policy specifications. The analysis shows that expected future revenue plays an important role in the low fiscal limits of developing countries, relative to those of developed countries. External debt carries additional risks since large devaluation of the real exchange rate can suddenly raise default probabilities. Consistent with majority views, fiscal consolidations are coun
In: Journal of economic dynamics & control, Band 159, S. 104802
ISSN: 0165-1889
In: The Canadian journal of economics: the journal of the Canadian Economics Association = Revue canadienne d'économique, Band 55, Heft 2, S. 868-904
ISSN: 1540-5982
AbstractWe study the fiscal implications of interest rate normalization from the zero lower bound (ZLB) in the United States. At the ZLB, falling tax revenues and real bond prices increase government debt accumulation. During normalization, interest payments remain above the path without the ZLB, and government debt can increase further despite the recovery of output and tax revenues. Against the yardstick of ability to pay, interest rate normalization is unlikely to threaten federal debt sustainability at the current net federal debt level about 100% of GDP. If the government fails to reform Social Security and major healthcare programs, sovereign default risk can rise more quickly when debt reaches 150% of GDP. Also, a more active monetary policy anchors inflation expectations better, generates a faster recovery and, hence, slows down debt accumulation more than a less active one does. An unexpected early liftoff, however, can prolong a recession and increase debt accumulation more at the ZLB and during normalization.
In: Journal of economic dynamics & control, Band 117, S. 103860
ISSN: 0165-1889
In: Federal Reserve Bank of Kansas City Working Paper No. 20-12
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In: IMF Working Paper No. 20/71
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