It is known that, in the context of a real business cycle model with constant returns to scale and a balanced budget fiscal policy rule, steady state indeterminacy may arise as a result of endogenously determined labor income tax rates. This happens for a range of empirically plausible tax rates...

It is known that, in the context of a real business cycle model with constant returns to scale and a balanced budget fiscal policy rule, steady state indeterminacy may arise as a result of endogenously determined labor income tax rates. This happens for a range of empirically plausible tax rates...