Risk, Optimal Government Finance, and Monetary Policies in a Growing Economy

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Risk, Optimal Government Finance, and Monetary Policies in a Growing Economy

Author Info

Grinols, E-L
Turnovsky, S-J

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Stephen J Turnovsky

Abstract

Optimal tax and monetary policies in a stochastic monetary growth model are investigated. Our findings are of three general types. First, both capital income taxes and monetary growth are shown to influence the economy through effective risk adjusted measures, expressed as a linear function of their respective means and variances. Second, two stochastic netrality results relating to money and bonds, the two nominal assets in the economy, are identified. Third optimal policy rules relating to taxes, bond finance, and money creation are characterized. An essential component of optimal financial policy is a risk-adjusted balanced budget.

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Publisher Info
Paper provided by Department of Economics at the University of Washington in its series Discussion Papers in Economics at the University of Washington with number 97-10.

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Length: 31 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:fth:washer:97-10

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Article
- Grinols, Earl L & Turnovsky, Stephen J, 1998. "Risk, Optimal Government Finance and Monetary Policies in a Growing Economy," Economica, London School of Economics and Political Science, vol. 65(259), pages 401-27, August. [Downloadable!] (restricted)
Paper
- Grinols, E-L & Turnovsky, S-J, 1997. "Risk, Optimal Government Finance, and Monetary Policies in a Growing Economy," Working Papers 97-10, University of Washington, Department of Economics.

Find related papers by JEL classification:
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Marcelo Bianconi, 2004. "The Welfare Gains from Stabilization in a Stochastically Growing Economy with Idiosyncratic Shocks and Flexible Labor Supply," Discussion Papers Series, Department of Economics, Tufts University 0413, Department of Economics, Tufts University. [Downloadable!]
Other versions:
- Stephen Turnovsky & Marcelo Bianconi, . "The Welfare Gains from Stabilization in a Stochastically Growing Economy with Idiosyncratic Shocks and Flexible Labor Supply," Working Papers UWEC-2004-08-P, University of Washington, Department of Economics. [Downloadable!]
- Marcelo Bianconi & Stephen J. Turnovsky, 2003. "The Welfare Gains from Stabilization in a Stochastically Growing Economy with Idiosyncratic Shocks and Flexible Labor Supply," Computing in Economics and Finance 2003 277, Society for Computational Economics. [Downloadable!]
Paola Giuliano & Stephen Turnovsky, 2000. "Intertemporal Substitution, Risk Aversion, and Economic Performance in a Stochastically Growing Open Economy," Working Papers 0002, University of Washington, Department of Economics. [Downloadable!]
Other versions:
- Paola Giuliano & Stephen Turnovsky, 2002. "Intertemporal Substitution, Risk Aversion, and Economic Performance in a Stochastically Growing Open Economy," Working Papers UWEC-2002-20-P, University of Washington, Department of Economics. [Downloadable!]
- Paola Giuliano & Stephen Turnovsky, 2000. "Intertemporal Substitution, Risk Aversion, and Economic Performance in a Stochastically Growing Open Economy," Discussion Papers in Economics at the University of Washington 0002, Department of Economics at the University of Washington. [Downloadable!]
- Giuliano, Paola & Turnovsky, Stephen J., 2003. "Intertemporal substitution, risk aversion, and economic performance in a stochastically growing open economy," Journal of International Money and Finance, Elsevier, vol. 22(4), pages 529-556, August. [Downloadable!] (restricted)
Stephen Turnovsky & Pradip Chattopadhyay, 1998. "Volatility and Growth in Developing Economies: Some Numerical Results and Empirical Evidence," Working Papers 0055, University of Washington, Department of Economics. [Downloadable!]
Other versions:
- Stephen Turnovsky & Pradip Chattopadhyay, 1998. "Volatility and Growth in Developing Economies: Some Numerical Results and Empirical Evidence," Discussion Papers in Economics at the University of Washington 0055, Department of Economics at the University of Washington. [Downloadable!]
- Turnovsky, Stephen J. & Chattopadhyay, Pradip, 2003. "Volatility and growth in developing economies: some numerical results and empirical evidence," Journal of International Economics, Elsevier, vol. 59(2), pages 267-295, March. [Downloadable!] (restricted)
Ratbek Dzhumashev, 2007. "Corruption, Uncertainty And Growth," Monash Economics Working Papers 15/07, Monash University, Department of Economics. [Downloadable!]
Aude POMMERET & William T. SMITH, 2004. "Fertility, Volatility, and Growth," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 04.08, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
Other versions:
- Pommeret, Aude & Smith, William T., 2005. "Fertility, volatility, and growth," Economics Letters, Elsevier, vol. 87(3), pages 347-353, June. [Downloadable!] (restricted)
Stilianos Fountas & Menelaos Karanasos, 2008. "Are economic growth and the variability of the business cycle related ? Evidence from five European countries," Discussion Paper Series 2008_17, Department of Economics, University of Macedonia, revised Dec 2008. [Downloadable!]
Other versions:
- Stilianos Fountas & Menelaos Karanasos, 2008. "Are economic growth and the variability of the business cycle related? Evidence from five European countries," International Economic Journal, Korean International Economic Association, vol. 22(4), pages 445-459. [Downloadable!] (restricted)
Dzhumashev, Ratbek, 2008. "Corruption and Disposable Risk," MPRA Paper 11772, University Library of Munich, Germany. [Downloadable!]
Djumashev, R, 2007. "Corruption, uncertainty and growth," MPRA Paper 3716, University Library of Munich, Germany. [Downloadable!]

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