International Coordination of Fiscal Policy in Limiting Economies
AbstractThe authors examine the limiting behavior of cooperative and noncooperative fiscal policies as countries' market power goes to zero. They show that these policies converge if countries raise revenues through lump-sum taxation. However, if there are unremovable domestic distortions, such as distorting taxes, there can be gains to coordination even when a single country's policy cannot affect world prices. These results differ from the received wisdom in the optimal tariff literature. The key distinction is that, contrary to the tariff literature, the spending decisions of governments are explicitly modeled. Copyright 1990 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 98 (1990)
Issue (Month): 3 (June)
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Web page: http://www.journals.uchicago.edu/JPE/
Other versions of this item:
- V.V. Chari & Patrick J. Kehoe, 1989. "International coordination of fiscal policy in limiting economies," Staff Report 121, Federal Reserve Bank of Minneapolis.
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