Kawai, Masahiro; Maccini, Louis J - In: Journal of Money, Credit and Banking 27 (1995) 3, pp. 639-58
This paper studies fiscal deficits, consumption-saving behavior, current account imbalances, and exchange rates in a small open economy populated by households with finite lives. Suppose the government undertakes a bond-financed tax cut today. The authors find that if tax finance is anticipated...