Sekkat, Khalid; Martinez-Mongay, Carlos - Département d'Économie Appliquée (DULBEA), Solvay … - 2005
The paper contributes to the debate on the stability/efficiency tradeoff of automatic stabilizers. A simple AD-AS two countries model is presented and illustrates circumstances where a reduction in taxes can foster stabilization. The testable implication from the model is that tax cuts can...