The equilibrium ramification of a balanced budget rule are scrutinized in a one sector growth model augmented with investment frictions and a non-separable utility function in consumption and leisure. Edgeworth-complementarity between consumption and labor is formulated so as to generate a...

In some Business-Cycle models a fiscal policy that sets income taxes counter cyclically can cause macroeconomic instability by giving rise to multiple equilibria and as a result to fluctuations caused by self fulfilling expectations. This paper shows that consolidated budget rules with...

This paper discusses monetary and fiscal policy interactions that stabilize government debt. Two distortions prevail in the model economy: income taxes and liquidity constraints. Possible obstructions to fiscal policy include a ceiling on the equilibrium debt-to-GDP ratio, zero or negative...

I discuss the joint effects of government-taxes and interest-rates. A fiscal authority performs `exogenous' and `endogenous' changes to the income-tax rate and a monetary authority sets the nominal-interest. A wedge between rates of self-financing of tax cuts and the income-tax Laffer curve...

This paper specifi…es determinacy regions in the parameter space of monetary and …fiscal policy interactions in economies with …finance and tax distortions. It shows that the initial valuation of government debt is the …fixed point of a continuous mapping that takes a closed interval on the...

This paper offers a fi…xed-point approach to the issue of price level determination in general equilibrium. It arrives at a solution method for rational expectations models with missing initial conditions for financial wealth. The paper emphasizes the calculation of an equilibrium initial...

This paper studies how the presence of an income tax changes the properties of general equilibrium models. It fi…nds that relative to the previous literature [following Leeper (1991)] a new area of determinacy exists where a passive …fiscal rule combined with a passive monetary rule can still...