Ganelli, Giovanni; Tervala, Juha - In: FinanzArchiv: Public Finance Analysis 70 (2014) 1, pp. 31-66
This paper fills a gap in the literature by focusing on the degree of self-financing of tax cuts in a New Keynesian two-country model. We find that the degree of self-financing of income tax cuts is negative on impact, but it quickly becomes positive. The open-economy dimension does not matter...