We examine the quantitative implications of government fiscal policy in a discrete-time one-sector growth model with a productive externality that generates social increasing returns to scale. Starting from a laissez-faire economy that exhibits an indeterminate steady state (a sink), we show...

The development of a real business cycle model in which government fiscal variables such as tax rates and public expenditures are endogenous. The authors characterize the "optimal" behavior of these policy variables over the business cycle and relate this behavior to movements in private-sector...

This paper develops a one-sector real business cycle model in which competitive firms allocate resources for the production of goods, investment in new capital, and maintenance of existing capital. Firms also choose the utilization rate of existing capital. A higher utilization rate leads to...

A demonstration of how an income tax schedule that exhibits a progressivity feature can ensure saddle-path stability in a one-sector, real business-cycle model with sufficient increasing returns in production, thereby shielding the economy against sunspot fluctuations.

This paper develops a small forward-looking macroeconomic model where the Federal Reserve estimates the level of potential output in real time by running a regression on past output data. The Fed's perceived output gap is used as an input to the monetary policy rule while the true output gap...

An estimation of an optimal program of distortionary taxes, money growth, and borrowing to finance a stream of expenditures based on a real business cycle model in which distribution issues between the rich and poor play a fundamental role in policy decisions.

A presentation of a dynamic general-equilibrium model with productive public capital to help account for differences in the business cycle characteristics of public- versus private- sector expenditures in postwar U.S. data.

A study of the effects of expectations and central bank credibility on the economy's dynamic transition path during a disinflation. Using a version of the Fuhrer-Moore model, it compares simulations under different specifications that vary according to the way expectations are formed and the...

This paper develops a general equilibrium model to examine the quantitative effects of speculative bubbles on capital accumulation, growth, and welfare. A near-rational bubble component in the model equity price generates excess volatility in response to observed technology shocks. In...