European Parliament Library

Fiscal Rules and Countercyclical Policy :, Frank Ramsey Meets Gramm-Rudman-Hollings, Evan Tanner

Abstract
Fiscal rules—legal restrictions on government borrowing, spending, or debt accumulation (like the Gramm-Rudman-Hollings Act in the United States)—have recently been adopted or considered in several countries, both industrial and developing. Previous literature stresses that such laws restrict countercyclical government borrowing, thus preventing intertemporal equalization of marginal deadweight losses of taxation—an idea associated with Frank Ramsey. However, such literature typically abstracts from persistent current deficits that are financed by future tax increases. Eliminating such deficits may substantially reduce tax rate variability—the very goal of countercyclical borrowing—even over a finite horizon. Thus, Gramm-Rudman-Hollings and Frank Ramsey are not necessarily enemies and they may even be good friends!
Table Of Contents
""Contents""; ""I. INTRODUCTION""; ""II. THE OPTIMAL FISCAL RULE: CERTAINTY, INFINITE HORIZON""; ""III. FAVORING THE PRESENT OVER THE FUTURE?""; ""IV. OPTIMIZATION UNDER UNCERTAINTY: OUTPUT AND ACCESS TO CREDIT""; ""V. A COMPARISON OF FISCAL REGIMES""; ""A. The Regimes Defined""; ""B. Interaction Between Borrowing Constraints and Tax Regimes""; ""C. Simulation Results""; ""VI. EXTENSION: VARIABLE GOVERNMENT EXPENDITURES""; ""VII. EXTENSION: PUBLIC SECTOR SIZE AND VOLATILITY""; ""VIII. Summary and Conclusions""; ""REFERENCES""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (29 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781283368674

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