Strict Fiscal Rules and Macroeconomic Stability: The Case of Social VAT.

This paper studies the local dynamic properties of a simple general equilibrium model with Social VAT. Strict balanced budget rules often lead to real indeterminacy of aggregate equilibrium, leaving room for «sunspots» fluctuations. In a closed-economy setup, social VAT escapes this property and only reduces the aggregate labor supply elasticity. However, the quantitative effects are weak.

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Year of publication:	2013
Authors:	Fève, P. ; Matheron, J. ; Sahuc, J-G.
Institutions:	Banque de France
Subject:	Macroeconomic stability \| Social VAT \| Labor supply elasticity \| Aggregate fluctuations

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Extent:	application/pdf
Series:	Working papers.
Type of publication:	Book / Working Paper
Notes:	17 pages
Classification:	E32 - Business Fluctuations; Cycles ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010815974