GHILARDI, MATTEO F.; ROSSI, RAFFAELE - In: Journal of Money, Credit and Banking 46 (2014) 8, pp. 1787-1809
It has been shown that under perfect competition and a Cobb‐Douglas production function, a basic real business cycle model may exhibit indeterminacy and sunspot fluctuations when income tax rates are determined by a balanced‐budget rule (BBR). This paper introduces in an otherwise standard...