fiscal policies in a growth model

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1、Chapter11FiscalPoliciesinaGrowthModel11.1.IntroductionThischapterstudieseffectsoftechnologyandfiscalshocksonequilibriumout-comesinanonstochasticgrowthmodel.Weusethemodeltostatesomeclassicdoctrinesabouttheeffectsofvarioustypesoftaxesandalsoasalaboratorytoexhibitnumericaltechniquesfor

2、approximatingequilibriaandtodisplaythestructureofdynamicmodelsinwhichdecisionmakershaveperfectforesightaboutfuturegovernmentdecisions.Foresightimpartseffectsonpricesandal-locationsthatprecedegovernmentactionsthatcausethem.FollowingHall(1971),weaugmentanonstochasticversionofthestan

3、dardgrowthmodelwithagovernmentthatpurchasesastreamofgoodsandthatfinancesitselfwithanarrayofdistortingflat-ratetaxes.Wetakegovernmentbehaviorasexogenous,1whichmeansthatforusagovernmentissimplyalistofsequencesforgovernmentpurchases{g}∞andtaxes{τ,τ,τ,τ}∞.tt=0ctktnthtt=0Hereτct,τkt,τnt

4、are,respectively,time-varyingflat-rateratesonconsumption,earningsfromcapital,andlaborearnings;andτhtisalump-sumtax(a“headtax”or“polltax”).Distortingtaxespreventacompetitiveequilibriumallocationfromsolvingaplanningproblem.Therefore,tocomputeanequilibriumallocationandpricesystem,wes

5、olveasystemofnonlineardifferenceequationsconsistingofthefirst-orderconditionsfordecisionmakersandtheotherequilibriumconditions.Wefirstuseamethodcalledshooting.Itproducesanaccurateapproximation.LessaccuratebutinsomewaysmorerevealingapproximationscanbefoundbyfollowingHall(1971),whosol

6、vedalinearapproximationtotheequilibriumconditions.WeapplythelagoperatorsdescribedinappendixAofchapter2tofindandrepresentthesolutioninawaythatisespeciallyhelpfulinrevealingthedynamiceffectsofperfectlyforeseenalterationsintaxesandexpendituresand1Inchapter16,wetakeupaversionofthemodel

7、inwhichthegovernmentchoosestaxestomaximizetheutilityofarepresentativeconsumer.–375–376FiscalPoliciesinaGrowthModelhowcurrentvaluesofendogenousvariablesrespondtopathsoffutureexogenousvariables.211.2.Economy11.2.1.Preferences,technology,informationThereisnouncertainty,anddecisionma

8、kershaveperfectforesight.Arepresen-tativ