【12月7日】Balanced-Budget Rules and Aggregate In

Abstract：

Abstract: This paper examines the stabilizing property of consumption taxes in a balanced-budget setting of a one-sector monetary growth model with cash-in-advance constrain. We find that saddle-path stability is not a necessary outcome even though the utility function is additively separable between consumption and leisure. Both the existence of a Laffer curve and the stabilization effect of consumption taxes crucially depend on the intertemporal elasticity of substitution in consumption and the elasticity of labor supply. Numerical examples also show that consumption taxes may have the risk of aggregate instability for the G-7 countries with the current quantitative easing policy.

Keywords: Balanced-budget rules, consumption tax, CIA constraint, indeterminacy.

JEL Classification: E32, E63.

薛涧坡简介:

薛涧坡，博士，现为中国人民大学财政金融学院讲师，主要研究领域为宏观经济学理论、货币政策与财政政策理论、经济增长理论等，曾在Journal of Economic Dynamic and Control, Macroeconomic Dynamics等国际期刊发表论文。