Notes on Papers on Public Debt & Dynamic Public Finance
|
|
- Holly Todd
- 8 years ago
- Views:
Transcription
1 Notes on Papers on Public Debt & Dynamic Public Finance
2 Lucas-Stokey, JME 1983 Optimal public finance with stochastic G, allowing for rich structure of asset markets (including claims equivalent to statecontingent government bonds). Tax structure limited to (distorting) proportionate tax on labor income (fixed real wage rate).
3 Government cannot tax existing bonds or, in other ways, levy lump-sum taxes. Optimal dynamic public finance entails extreme form of tax-rate smoothing. Tax rate on labor income set at positive value in period 0 and then never changed.
4 Contingencies on government bonds absorb fluctuations in G (or GDP, which defines tax base). For example, with nominal bonds, high inflation during wars would generate government revenue. Or bonds might have direct contingency; pay off well when G low (peace) and poorly when G high (war).
5 Moral-hazard problem for government? Incentive to make G too high (too many wars). (Smith and Ricardo on this issue.) Solution has time-consistency issues because of incentive to impose capital levies on existing wealth to mimic lump-sum tax.
6 Angeletos, QJE 2002 Like Lucas-Stokey, but rich maturity structure of government bonds substitutes for bonds contingent directly on G. Result depends on whether term structure of interest rates on bonds fully spans set of possible realizations of G (which is hard to believe).
7 Werning, QJE 2007 Specifies tax structure as linear function of labor income. Intercept amounts to lumpsum tax. Allows for taxes on initial wealth (bonds) and capital income.
8 Linear form of labor-income tax amounts to tractable approximation to Mirrlees formulation of non-linear labor-income tax of general form. As in Mirrlees, assumes heterogeneity in labor productivity (ability); unobservable to government.
9 At point in time, distorting tax rate chosen in accordance with tradeoff between desire to redistribute income (depends on form of utility function) versus distortions on labor effort. In baseline setting, distorting tax rate on labor income positive but time invariant (with rich asset structure, as in Lucas-Stokey). Therefore, extreme tax-rate smoothing.
10 Assumption is that government commits once-and-for-all to tax structure. Solution may be time-inconsistent, because there can still be incentives to enact capital levies on existing wealth (bonds) not to mimic lump-sum tax (which is directly available) but to help in tradeoff between redistribution and distortions.
11 Other time-consistency issue is that individual choices on work effort and income reveal individual ability (which persists over time). If abilities known, government can do better than original distorting tax. Non-linear income-tax schedule can be chosen to eliminate all tax distortions and achieve desired redistribution. Knowing this affects individual decisions on work effort. Individuals choose differently to avoid full revelation of types.
12 Aiyagari, Marcet, Sargent, Seppala, JPE 2002 Tax structure as in Lucas-Stokey; proportionate tax on labor income. Difference is asset/bond structure; limited to risk-free claims no statecontingent debt. Lump-sum transfers allowed.
13 Lower bound on government assets (upper bound on debt) corresponds to government being able to service debt with probability close to one. However, upper bound on government assets also important for solution.
14 In some cases, solution for taxes approximates Martingale result of Barro (1979). However, tendency in limit for government to accumulate enough assets (war chest) that enables it to pay for all G with asset earnings, so that labor tax rates are zero. (Requires finite upper bound on G for each period.) In this case, excess government revenue remitted as lump-sum transfers to households.
15 With binding upper bound on assets, solution is more like Barro (1979) even in limit. Upper bound may come from political-economy considerations tendency for governments to use large war chests for wasteful spending, G. (Only Singapore has enough discipline?) Also questionable that transfers really lump sum (non-distorting).
16 Bassetto and Sargent, QJE 2006 Political-economy model of choices of government spending and debt issue. Assumes lump-sum taxes (to isolate new issues of political economy, rather than smoothing of distorting tax rates). Choices dictated by elections, that is, majority voting (median voter).
17 G composed of non-durables and durables. (War outlays may be durables if benefits accrue partly to future generations.) Non-durables should be paid for by current taxes; balanced-budget requirement.
18 Durables would be under-provided if paid for entirely by current taxes, because benefits to future generations not internalized. This result requires finite horizons of individuals so that Ricardian Equivalence does not hold. Also, capitalization of benefits from publicsector durables into land prices might eliminate inefficiency.
19 In Bassetto-Sargent, some debt financing for durable G is optimal. Can think of partly in terms of what fraction of durable G to finance with debt and what maturity length to select for debt. Solutions resemble balanced-budget rules for state governments in U.S., where debt issue limited to capital projects.
20 DaCosta and Werning, JPE 2008 Optimal inflation tax when real money balances enter into utility functions. As in Mirrlees, optimally chosen non-linear tax on labor income;labor productivity heterogeneous and non observable by government. Assumes real money balances and labor income complementary; persons with higher income have greater service value from money (e.g. for transactions purposes).
21 Result: In an equilibrium with positive laborincome taxes, non-optimal to tax money balances; nominal interest rate=0 (Friedman rule). Reason is taxing money does not help with incentive constraints in optimal-income-tax problem. High-income persons have to be motivated not to under-report productivities by working less and earning less labor income.
22 These deviators would demand less money (given complementarity assumption), implying positive tax on money, R>0, makes deviations more attractive. Therefore, government can do better by having R=0 (since R<0 ruled out) and adjusting income-tax schedule accordingly.
NOTES ON OPTIMAL DEBT MANAGEMENT
Journal of Applied Economics, Vol. II, No. 2 (Nov 1999), 281-289 NOTES ON OPTIMAL DEBT MANAGEMENT 281 NOTES ON OPTIMAL DEBT MANAGEMENT ROBERT J. BARRO Harvard University Consider the finance of an exogenous
More informationOptimal fiscal policy under commitment
Abstract Optimal Fiscal and Monetary Policy with Commitment Mikhail Golosov and Aleh Tsyvinski 1 May 31, 2006 Forthcoming in New Palgrave Dictionary of Economics and Law Optimal fiscal and monetary policy
More informationOn the irrelevance of government debt when taxes are distortionary
On the irrelevance of government debt when taxes are distortionary Marco Bassetto a,b,, Narayana Kocherlakota c,b a Department of Economics, University of Minnesota, 271 19th Ave. S., Minneapolis, MN 55455,
More informationGovernment Debt Management: the Long and the Short of it
Government Debt Management: the Long and the Short of it E. Faraglia (U. of Cambridge and CEPR) A. Marcet (IAE, UAB, ICREA, BGSE, MOVE and CEPR), R. Oikonomou (U.C. Louvain) A. Scott (LBS and CEPR) ()
More informationMoney and Public Finance
Money and Public Finance By Mr. Letlet August 1 In this anxious market environment, people lose their rationality with some even spreading false information to create trading opportunities. The tales about
More informationNew Dynamic Public Finance. Mikhail Golosov (Yale, New Economic School, and NBER) Aleh Tsyvinski (Yale, New Economic School, and NBER)
New Dynamic Public Finance Mikhail Golosov (Yale, New Economic School, and NBER) Aleh Tsyvinski (Yale, New Economic School, and NBER) New Dynamic Public Finance is a recent literature that analyzes taxation
More informationOptimal Management of Indexed and Nominal Debt
ANNALS OF ECONOMICS AND FINANCE 4, 1 15 (2003) Optimal Management of Indexed and Nominal Debt Robert Barro Department of Economics, Harvard University Cambridge, MA 02138-3001, USA E-mail: rbarro@harvard.edu
More informationOptimal Taxation in a Limited Commitment Economy
Optimal Taxation in a Limited Commitment Economy forthcoming in the Review of Economic Studies Yena Park University of Pennsylvania JOB MARKET PAPER Abstract This paper studies optimal Ramsey taxation
More informationECON 3312 Macroeconomics Exam 3 Fall 2014. Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
ECON 3312 Macroeconomics Exam 3 Fall 2014 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Everything else held constant, an increase in net
More informationDiscussion of. Public Debt and Changing Inflation Targets. Guido Ascari, University of Pavia
Discussion of Public Debt and Changing Inflation Targets by M. Krause and S. Moyen Guido Ascari, University of Pavia Bundesbank and Banque de France Conference Fiscal and Monetary Policy Challenges in
More informationTaxation, redistribution, and debt in incomplete market economies with aggregate shocks
Taxation, redistribution, and debt in incomplete market economies with aggregate shocks Mikhail Golosov Princeton Thomas J. Sargent NYU April 30, 2012 Abstract We study an incomplete market economy with
More informationOptimal Taxation with Incomplete Markets
Optimal Taxation with Incomplete Markets Anmol Bhandari apb296@nyu.edu David Evans dgevans@nyu.edu Mikhail Golosov golosov@princeton.edu Thomas J. Sargent thomas.sargent@nyu.edu November 23, 2013 Abstract
More informationFaraglia, Marcet and Scott: In Search of a Theory of Debt Management. Dirk Niepelt Gerzensee; Bern; IIES, Stockholm; CEPR May 2008
Faraglia, Marcet and Scott: In Search of a Theory of Debt Management Dirk Niepelt Gerzensee; Bern; IIES, Stockholm; CEPR May 2008 Overview Complete market theory of the maturity structure generates quantitatively
More informationSIMPLE GUIDELINES FOR INTEREST RATE POLICY*
SIMPLE GUIDELINES FOR INTEREST RATE POLICY* José Maria Brandão de Brito** Pedro Teles*** 1. INTRODUCTION Those of us working at research departments in central banks are regularly questioned on the right
More informationReforming the Tax System Lecture II: The Taxation of Savings. December 2015 Richard Blundell University College London
Econ 3007 Economic Policy Analysis Reforming the Tax System Lecture II: The Taxation of Savings December 205 Richard Blundell niversity ollege London Teaching Resources at: http://www.ucl.ac.uk/~uctp39a/lect.html
More informationWeek 4 Tutorial Question Solutions (Ch2 & 3)
Chapter 2: Q1: Macroeconomics P.52 Numerical Problems #3 part (a) Q2: Macroeconomics P.52 Numerical Problems #5 Chapter 3: Q3: Macroeconomics P.101 Numerical Problems #5 Q4: Macroeconomics P102 Analytical
More informationCurrent Accounts in Open Economies Obstfeld and Rogoff, Chapter 2
Current Accounts in Open Economies Obstfeld and Rogoff, Chapter 2 1 Consumption with many periods 1.1 Finite horizon of T Optimization problem maximize U t = u (c t ) + β (c t+1 ) + β 2 u (c t+2 ) +...
More informationOn the Optimality of Financial Repression
Discussion of On the Optimality of Financial Repression V.V. Chari Alessandro Dovis Patrick Kehoe Alberto Martin CREI, Universitat Pompeu Fabra and Barcelona GSE, IMF July 2014 Motivation Recent years
More informationcepr briefing paper Defaulting on The Social Security Trust Fund Bonds: Winner and Losers CENTER FOR ECONOMIC AND POLICY RESEARCH SUMMARY Dean Baker 1
cepr CENTER FOR ECONOMIC AND POLICY RESEARCH briefing paper Defaulting on The Social Security Trust Fund Bonds: Winner and Losers Dean Baker 1 July 23, 2001 SUMMARY The United States government has never
More informationFinal. 1. (2 pts) What is the expected effect on the real demand for money of an increase in the nominal interest rate? How to explain this effect?
Name: Number: Nova School of Business and Economics Macroeconomics, 1103-1st Semester 2013-2014 Prof. André C. Silva TAs: João Vaz, Paulo Fagandini, and Pedro Freitas Final Maximum points: 20. Time: 2h.
More informationOPTIMALTAXATIONIN DYNAMIC STOCHASTIC ECONOMIES: THEORY AND EVIDENCE
OPTIMALTAXATIONIN DYNAMIC STOCHASTIC ECONOMIES: THEORY AND EVIDENCE by Kenneth L. Judd Hoover Institution, Stanford University and National Bureau of Economic Research May, 1989 revised January, 1991 revised
More informationSelf-fulfilling debt crises: Can monetary policy really help? By P. Bacchetta, E. Van Wincoop and E. Perazzi
Self-fulfilling debt crises: Can monetary policy really help? By P. Bacchetta, E. Van Wincoop and E. Perazzi Discussion by Luca Dedola (ECB) Nonlinearities in Macroeconomics and Finance in Light of the
More informationHow To Calculate The World Interest Rate
International Debt Deleveraging Luca Fornaro CREI and Universitat Pompeu Fabra 12 th Macroeconomic Policy Research Workshop Budapest, September 213 1 Motivating facts: Household debt/gdp Household debt/gdp
More informationFISCAL POLICY* Chapter. Key Concepts
Chapter 11 FISCAL POLICY* Key Concepts The Federal Budget The federal budget is an annual statement of the government s expenditures and tax revenues. Using the federal budget to achieve macroeconomic
More information. In this case the leakage effect of tax increases is mitigated because some of the reduction in disposable income would have otherwise been saved.
Chapter 4 Review Questions. Explain how an increase in government spending and an equal increase in lump sum taxes can generate an increase in equilibrium output. Under what conditions will a balanced
More information6. Budget Deficits and Fiscal Policy
Prof. Dr. Thomas Steger Advanced Macroeconomics II Lecture SS 2012 6. Budget Deficits and Fiscal Policy Introduction Ricardian equivalence Distorting taxes Debt crises Introduction (1) Ricardian equivalence
More informationHow To Find Out If A Tax System Is More Efficient
Optimal Income Taxation: Mirrlees Meets Ramsey Jonathan Heathcote FRB Minneapolis Hitoshi Tsujiyama Goethe University Frankfurt Iowa State University, April 2014 The views expressed herein are those of
More informationNotes - Gruber, Public Finance Chapter 20.3 A calculation that finds the optimal income tax in a simple model: Gruber and Saez (2002).
Notes - Gruber, Public Finance Chapter 20.3 A calculation that finds the optimal income tax in a simple model: Gruber and Saez (2002). Description of the model. This is a special case of a Mirrlees model.
More informationLeveraged purchases of government debt and deflation
Leveraged purchases of government debt and deflation R. Anton Braun Federal Reserve Bank of Atlanta Tomoyuki Nakajima Kyoto University October 5, 2011 Abstract We consider a model in which individuals
More informationFourth Edition. University of California, Berkeley
Fourth Edition University of California, Berkeley Introduction Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Epilogue References
More informationOn the irrelevance of government debt when taxes are distortionary $
Journal of Monetary Economics 51 (2004) 299 304 On the irrelevance of government debt when taxes are distortionary $ Marco Bassetto a,b, *, Narayana Kocherlakota c,b,d a Department of Economics, University
More informationOptimal Income Taxation: Mirrlees Meets Ramsey
Optimal Income Taxation: Mirrlees Meets Ramsey Jonathan Heathcote FRB Minneapolis Hitoshi Tsujiyama Goethe University Frankfurt Ohio State University, April 17 2014 The views expressed herein are those
More informationSOCIAL SECURITY REFORM: work incentives ISSUE BRIEF NO. 6. Issue Brief No. 6. work incentives
Introduction Issue Brief No. 6 Social Security Reform: work incentives This sixth and final Treasury issue brief on Social Security reform discusses Social Security s effect on work incentives and the
More informationIS MORE INFORMATION BETTER? THE EFFECT OF TRADERS IRRATIONAL BEHAVIOR ON AN ARTIFICIAL STOCK MARKET
IS MORE INFORMATION BETTER? THE EFFECT OF TRADERS IRRATIONAL BEHAVIOR ON AN ARTIFICIAL STOCK MARKET Wei T. Yue Alok R. Chaturvedi Shailendra Mehta Krannert Graduate School of Management Purdue University
More informationECON20310 LECTURE SYNOPSIS REAL BUSINESS CYCLE
ECON20310 LECTURE SYNOPSIS REAL BUSINESS CYCLE YUAN TIAN This synopsis is designed merely for keep a record of the materials covered in lectures. Please refer to your own lecture notes for all proofs.
More informationOptimal Fiscal Policies. Long Bonds and Interest Rates under Incomplete Markets. Bank of Spain, February 2010
Optimal Fiscal Policies. Long Bonds and Interest Rates under Incomplete Markets Bank of Spain, February 2010 1 In dynamic models, optimal scal policy and debt management should be jointly determined. Optimality
More informationEconomic Growth and Government Size. Mark Pingle Professor of Economics University of Nevada, Reno. and
Economic Growth and Government Size By Mark Pingle Professor of Economics University of Nevada, Reno and Mina Mahmoudi PhD Candidate University of Nevada, Reno Short Summary There is good reason to expect
More informationUse the following to answer question 15: Exhibit: Short-run Phillips Curve. Page 3
Chapter 13 1. According to the sticky-price model: A) all firms announce their prices in advance. B) all firms set their prices in accord with observed prices and output. C) some firms set their prices
More informationThe Tax Smoothing Implications of the Federal Debt Paydown
GEORGE J. HALL Yale University STEFAN KRIEGER Yale University The Tax Smoothing Implications of the Federal Debt Paydown AFTER NEARLY THIRTY straight years of deficit spending, the fiscal position of the
More informationOptimal Consumption with Stochastic Income: Deviations from Certainty Equivalence
Optimal Consumption with Stochastic Income: Deviations from Certainty Equivalence Zeldes, QJE 1989 Background (Not in Paper) Income Uncertainty dates back to even earlier years, with the seminal work of
More informationThe Impact of Government Debt and Taxation on Endogenous Growth in the Presence of a Debt Trigger
The Impact of Government Debt and Taxation on Endogenous Growth in the Presence of a Debt Trigger Gregory W. Huffman March, 2015 Abstract Relatively little is known about how government debt influences
More informationUniversidad de Montevideo Macroeconomia II. The Ramsey-Cass-Koopmans Model
Universidad de Montevideo Macroeconomia II Danilo R. Trupkin Class Notes (very preliminar) The Ramsey-Cass-Koopmans Model 1 Introduction One shortcoming of the Solow model is that the saving rate is exogenous
More informationAgenda. The IS LM Model, Part 2. The Demand for Money. The Demand for Money. The Demand for Money. Asset Market Equilibrium.
Agenda The IS LM Model, Part 2 Asset Market Equilibrium The LM Curve 13-1 13-2 The demand for money is the quantity of money people want to hold in their portfolios. The demand for money depends on expected
More informationCommentary: What Do Budget Deficits Do?
Commentary: What Do Budget Deficits Do? Allan H. Meltzer The title of Ball and Mankiw s paper asks: What Do Budget Deficits Do? One answer to that question is a restatement on the pure theory of debt-financed
More informationPrice Discrimination: Part 2. Sotiris Georganas
Price Discrimination: Part 2 Sotiris Georganas 1 More pricing techniques We will look at some further pricing techniques... 1. Non-linear pricing (2nd degree price discrimination) 2. Bundling 2 Non-linear
More informationCHAPTER 5 Review... Page 1
CHAPTER 5 Review... 1. The rate of inflation is the: A) median level of prices. B) average level of prices. C) percentage change in the level of prices. D) measure of the overall level of prices. 2. If
More informationChapter 22 Taxes on Savings
Introduction Chapter 22 Taxes on Savings Jonathan Gruber Public Finance and Public Policy Does the existing structure of income taxation in the United States reduce the amount of savings done by individuals?
More information11/6/2013. Chapter 16: Government Debt. The U.S. experience in recent years. The troubling long-term fiscal outlook
Chapter 1: Government Debt Indebtedness of the world s governments Country Gov Debt (% of GDP) Country Gov Debt (% of GDP) Japan 17 U.K. 9 Italy 11 Netherlands Greece 11 Norway Belgium 9 Sweden U.S.A.
More informationSection 4: Adding Government and Money
Section 4: Adding and Money Ec 123 April 2009 Outline This Section Fiscal Policy Money Next Keynesian Economics Recessions Problem Set 1 due Tuesday in class Fiscal Policy Fiscal Policy is the use of the
More informationTaxes, debts, and redistributions with aggregate shocks
Taxes, debts, and redistributions with aggregate shocks Anmol Bhandari apb296@nyu.edu David Evans dgevans@nyu.edu Thomas J. Sargent thomas.sargent@nyu.edu Mikhail Golosov golosov@princeton.edu September
More informationMACROECONOMIC ANALYSIS OF VARIOUS PROPOSALS TO PROVIDE $500 BILLION IN TAX RELIEF
MACROECONOMIC ANALYSIS OF VARIOUS PROPOSALS TO PROVIDE $500 BILLION IN TAX RELIEF Prepared by the Staff of the JOINT COMMITTEE ON TAXATION March 1, 2005 JCX-4-05 CONTENTS INTRODUCTION... 1 EXECUTIVE SUMMARY...
More informationSince 1960's, U.S. personal savings rate (fraction of income saved) averaged 7%, lower than 15% OECD average. Why? Why do we care?
Taxation and Personal Saving, G 22 Since 1960's, U.S. personal savings rate (fraction of income saved) averaged 7%, lower than 15% OECD average. Why? Why do we care? Efficiency issues 1. Negative consumption
More informationOptimal Money and Debt Management: liquidity provision vs tax smoothing
1 2 Optimal Money and Debt Management: liquidity provision vs tax smoothing 3 Matthew Canzoneri Robert Cumby Behzad Diba 4 5 First Draft: April 10, 2013 This Draft: 11/13/14 6 7 8 9 10 11 12 13 14 Abstract
More informationOECD countries rely to varying degrees on
DUAL INCOME TAX THE DUAL INCOME TAX SYSTEM AN OVERVIEW ROBIN BOADWAY* They define a single measure of taxable income from all sources, and then apply a single rate schedule. However, some fundamental administrative
More informationLife Cycle Asset Allocation A Suitable Approach for Defined Contribution Pension Plans
Life Cycle Asset Allocation A Suitable Approach for Defined Contribution Pension Plans Challenges for defined contribution plans While Eastern Europe is a prominent example of the importance of defined
More informationReal Business Cycle Models
Real Business Cycle Models Lecture 2 Nicola Viegi April 2015 Basic RBC Model Claim: Stochastic General Equlibrium Model Is Enough to Explain The Business cycle Behaviour of the Economy Money is of little
More informationMoney and Capital in an OLG Model
Money and Capital in an OLG Model D. Andolfatto June 2011 Environment Time is discrete and the horizon is infinite ( =1 2 ) At the beginning of time, there is an initial old population that lives (participates)
More informationNausea Versus Contractured Debt
Nominal versus Indexed Debt: A Quantitative Horse Race Laura Alfaro Fabio Kanczuk Working Paper 05-053 Copyright 2005, 2010 by Laura Alfaro and Fabio Kanczuk Working papers are in draft form. This working
More informationSecuring Social Security: Sensitivity to Economic Assumptions and Analysis of Policy Options
GLOBAL DEVELOPMENT AND ENVIRONMENT INSTITUTE WORKING PAPER NO. 05-03 Securing Social Security: Sensitivity to Economic Assumptions and Analysis of Policy Options Brian Roach and Frank Ackerman May 2005
More informationOptimal Income Taxation with Multidimensional Types
1 Optimal Income Taxation with Multidimensional Types Kenneth L. Judd Hoover Institution NBER Che-Lin Su Northwestern University (Stanford Ph. D.) PRELIMINARY AND INCOMPLETE November, 2006 2 Introduction
More informationREADING 14: LIFETIME FINANCIAL ADVICE: HUMAN CAPITAL, ASSET ALLOCATION, AND INSURANCE
READING 14: LIFETIME FINANCIAL ADVICE: HUMAN CAPITAL, ASSET ALLOCATION, AND INSURANCE Introduction (optional) The education and skills that we build over this first stage of our lives not only determine
More informationECON 20310 Elements of Economic Analysis IV. Problem Set 1
ECON 20310 Elements of Economic Analysis IV Problem Set 1 Due Thursday, October 11, 2012, in class 1 A Robinson Crusoe Economy Robinson Crusoe lives on an island by himself. He generates utility from leisure
More informationInsurance and Taxation over the Life Cycle
Insurance and Taxation over the Life Cycle EMMANUEL FARHI Harvard University IVÁN WERNING MIT August 202 Abstract We consider a dynamic Mirrlees economy in a life cycle context and study the optimal insurance
More informationCHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY
CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY Learning goals of this chapter: What forces bring persistent and rapid expansion of real GDP? What causes inflation? Why do we have business cycles? How
More informationOptimal Nonlinear Income Taxation with a Finite Population
Optimal Nonlinear Income Taxation with a Finite Population Jonathan Hamilton and Steven Slutsky Department of Economics Warrington College of Business Administration University of Florida Gainesville FL
More informationAS Economics. Introductory Macroeconomics. Sixth Form pre-reading
AS Economics Introductory Macroeconomics Sixth Form pre-reading National income National income (Y) = money value of goods and services produced in an economy over a period of time, usually one year. National
More informationA Primer on Forecasting Business Performance
A Primer on Forecasting Business Performance There are two common approaches to forecasting: qualitative and quantitative. Qualitative forecasting methods are important when historical data is not available.
More informationStatic & Dynamic Gains from Trade. Factors determining gains from trade.
Learning Objectives Gains from Trade. Static & Dynamic Gains from Trade. Factors determining gains from trade. 6.1 Gains from Trade Gains from Trade can be traced to Ricardian Theory where it was stated
More informationPoliticians, Taxes, and Debt
Politicians, Taxes, and Debt Pierre Yared y February 27, 2008 Abstract The standard analysis of the e cient management of income taxes and debt assumes a benevolent government and ignores potential distortions
More informationChapter 11. Market-Clearing Models of the Business Cycle
Chapter 11 Market-Clearing Models of the Business Cycle Goal of This Chapter In this chapter, we study three models of business cycle, which were each developed as explicit equilibrium (market-clearing)
More informationEvaluation of the ECB s monetary policy strategy
Evaluation of the ECB s monetary policy strategy Prof. Otmar Issing 8 May 2003 1 1. 1998: Strategy for a new currency Main elements: - Quantification of the primary objective provided by the Treaty Definition
More informationChapter 4 Consumption, Saving, and Investment
Chapter 4 Consumption, Saving, and Investment Multiple Choice Questions 1. Desired national saving equals (a) Y C d G. (b) C d + I d + G. (c) I d + G. (d) Y I d G. 2. With no inflation and a nominal interest
More informationThe Optimal Path of Government Debt
Chapter 4 The Optimal Path of Government Debt Up to this point we have assumed that the government must pay for all its spending each period. In reality, governments issue debt so as to spread their costs
More informationHow Much Insurance in Bewley Models? *
How Much Insurance in Bewley Models? * Greg Kaplan New York University gregkaplan@nyu.edu Giovanni L. Violante New York University, CEPR, and NBER glv2@nyu.edu First Draft: 12 February 2008 - This Draft:
More informationThe Real Business Cycle Model
The Real Business Cycle Model Ester Faia Goethe University Frankfurt Nov 2015 Ester Faia (Goethe University Frankfurt) RBC Nov 2015 1 / 27 Introduction The RBC model explains the co-movements in the uctuations
More informationResearch Division Federal Reserve Bank of St. Louis Working Paper Series
Research Division Federal Reserve Bank of St. Louis Working Paper Series Scarcity of Safe Assets, Inflation, and the Policy Trap David Andolfatto and Stephen Williamson Working Paper 2015-002A http://research.stlouisfed.org/wp/2015/2015-002.pdf
More informationHow Should Public Pension Plans Invest?
How Should Public Pension Plans Invest? Deborah J. Lucas Stephen P. Zeldes Copyright 2009 by the American Economic Association. This paper was originally published in American Economic Review, 2009, 99:2,
More informationThe RBC methodology also comes down to two principles:
Chapter 5 Real business cycles 5.1 Real business cycles The most well known paper in the Real Business Cycles (RBC) literature is Kydland and Prescott (1982). That paper introduces both a specific theory
More informationThe Role of Time Preferences and Exponential-Growth Bias in Retirement Savings
The Role of Time Preferences and Exponential-Growth Bias in Retirement Savings Gopi Shah Goda Stanford University and NBER Colleen Flaherty Manchester University of Minnesota Matthew R. Levy London School
More informationPareto Efficient Income Taxation with Stochastic Abilities
This revision October 2006 Pareto Efficient Income Taxation with Stochastic Abilities Abstract This paper studies Pareto efficientincometaxationinaneconomywithfinitely-lived individuals whose income generating
More informationDOMESTIC CURRENCY DENOMINATED GOVERNMENT DEBT AS EQUITY IN THE PRIMARY SURPLUS
DOMESTIC CURRENCY DENOMINATED GOVERNMENT DEBT AS EQUITY IN THE PRIMARY SURPLUS CHRISTOPHER A. SIMS Prepared for presentation at the August 1999 Latin American meetings of the Econometric Society at Cancun,
More informationDebt Management and Optimal Fiscal Policy with Long Bonds
Debt Management and Optimal Fiscal Policy with Long Bonds Elisa Faraglia a,d, Albert Marcet b,d and Andrew Scott c,d a University of Cambridge, b Institut d Anàlisi Econòmica CSIC, ICREA, UAB and BGSE,
More informationDUAL INCOME TAXES: A NORDIC TAX SYSTEM
DUAL INCOME TAXES: A NORDIC TAX SYSTEM Peter Birch SørensenS University of Copenhagen Presentation at the conference on New Zealand Tax Reform Where to Next? Wellington, February 11-13,, 2009 AGENDA What
More informationIntermediate Macroeconomics: The Real Business Cycle Model
Intermediate Macroeconomics: The Real Business Cycle Model Eric Sims University of Notre Dame Fall 2012 1 Introduction Having developed an operational model of the economy, we want to ask ourselves the
More informationDebt, Deficits, and the Economy. John J. Seater
Debt, Deficits, and the Economy John J. Seater When conversation turns to the economy, one of the most popular topics of discussion is the government deficit. Newspaper columnists, TV pundits, and of course
More informationPractice Problems on the Capital Market
Practice Problems on the Capital Market 1- Define marginal product of capital (i.e., MPK). How can the MPK be shown graphically? The marginal product of capital (MPK) is the output produced per unit of
More informationPolitics, Surpluses, Deficits, and Debt
Defining Surpluses and Debt Politics, Surpluses,, and Debt Chapter 11 A surplus is an excess of revenues over payments. A deficit is a shortfall of revenues relative to payments. 2 Introduction After having
More informationConstructing the Supplementary Pension Table for the Netherlands
Discussion Paper Constructing the Supplementary Pension Table for the Netherlands The views expressed in this paper are those of the author(s) and do not necessarily reflect the policies of Statistics
More informationDiscussion of Capital Injection, Monetary Policy, and Financial Accelerators
Discussion of Capital Injection, Monetary Policy, and Financial Accelerators Karl Walentin Sveriges Riksbank 1. Background This paper is part of the large literature that takes as its starting point the
More informationOn the Efficiency of Competitive Stock Markets Where Traders Have Diverse Information
Finance 400 A. Penati - G. Pennacchi Notes on On the Efficiency of Competitive Stock Markets Where Traders Have Diverse Information by Sanford Grossman This model shows how the heterogeneous information
More informationImproving the Equity-Efficiency Trade-Off: Mandatory Savings Accounts for Social Insurance
International Tax and Public Finance, 11, 507 59, 004 c 004 Kluwer Academic Publishers. Printed in the Netherlands. Improving the Equity-Efficiency Trade-Off: Mandatory Savings Accounts for Social Insurance
More informationFrench Manufacturing Firms - Estimation andVariations of Different Organisations
Table 1: Parameter estimates (calibrating returns to scale, ) (1) (2) (3) (4) Method Unconstrained Unconstrained Unconstrained Unconstrained ( calibrated from Basu ( calibrated from ( calibrated at 0.5,
More informationFiscal Policy and Debt Management with Incomplete Markets
Fiscal Policy and Debt Management with Incomplete Markets Anmol Bhandari bhandari@umn.edu David Evans devans@uoregon.edu Mikhail Golosov golosov@princeton.edu Thomas J. Sargent thomas.sargent@nyu.edu December
More informationThe Effect of Housing on Portfolio Choice. July 2009
The Effect of Housing on Portfolio Choice Raj Chetty Harvard Univ. Adam Szeidl UC-Berkeley July 2009 Introduction How does homeownership affect financial portfolios? Linkages between housing and financial
More informationCHAPTER 11. AN OVEVIEW OF THE BANK OF ENGLAND QUARTERLY MODEL OF THE (BEQM)
1 CHAPTER 11. AN OVEVIEW OF THE BANK OF ENGLAND QUARTERLY MODEL OF THE (BEQM) This model is the main tool in the suite of models employed by the staff and the Monetary Policy Committee (MPC) in the construction
More informationTowards a Structuralist Interpretation of Saving, Investment and Current Account in Turkey
Towards a Structuralist Interpretation of Saving, Investment and Current Account in Turkey MURAT ÜNGÖR Central Bank of the Republic of Turkey http://www.muratungor.com/ April 2012 We live in the age of
More informationEffective marginal tax rates on savings 1
Effective marginal tax rates on savings 1 This working document outlines some preliminary research undertaken as part of the Tax and Transfer Incidence in Australia project completed in October 2015. This
More informationLOG ON TO www.bankinginfo.com.my OR VISIT OUR KIOSK AT MOST BANKS
FOR MORE INFORMATION LOG ON TO www.bankinginfo.com.my OR VISIT OUR KIOSK AT MOST BANKS First Edition Wealth Management for Small and Medium Enterprises FINANCIAL PLANNING AND YOU Wealth Management for
More informationFiscal policy and debt management with incomplete markets
Fiscal policy and debt management with incomplete markets Anmol Bhandari bhandari@umn.edu David Evans dgevans@nyu.edu Thomas J. Sargent thomas.sargent@nyu.edu Mikhail Golosov golosov@princeton.edu June
More informationEffect on Net Worth of 15- and 30-Year Mortgage Term
Effect on Net Worth of 15- and 30-Year Mortgage Term John R. Aulerich 1, The choice between a 15-year and 30-year fixed-rate mortgage term is evaluated considering the borrower s income tax rate, ability
More information