Do tax distortions lead to more indeterminacy? A New Keynesian perspective

Following the recent developments of the literature on stabilization policies, this paper investigates the effect of tax distortions on equilibrium determinacy in a New Keynesian economy with rule-of-thumb consumers and capital accumulation. In particular, we focus on the inter-action between monetary policy and tax distortions in supporting the saddle-path equilibrium under the assumptions of balanced budget and monetary policy satisfying a Taylor rule.

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Year of publication:	2007-05
Authors:	Giovanni, Di Bartolomeo ; Marco, Manzo
Institutions:	Department of Communication, University of Teramo
Subject:	rule-of-thumb consumers \| equilibrium determinacy \| fiscal and monetary policy inter-actions \| and tax distortions

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Extent:	application/pdf
Series:	wp.comunite.
Type of publication:	Book / Working Paper
Language:	English
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005590576