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Intertemporal Budget Policies and Macroeconomic Adjustment in a Small Open Economy

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  • Fisher, Walter H.

    (Department of Economics and Finance, Institute for Advanced Studies)

  • Bianconi, Marcelo

    (Department of Economics, Tufts University)

Abstract

This paper analyzes the role of nominal assets in ranking intertemporal budget policies in a growing open economy. The budget policies are ranked in terms of the public's intertemporal stock of tax liabilities. Our main result is that, in a small open economy, the valuation of private and public assets is in terms of the exogenous foreign price level under purchasing power parity. This constraint limits the scope of government to influence the real value of assets using fiscal and monetary policy shocks.

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File URL: http://www.ihs.ac.at/publications/eco/es-96.pdf
File Function: First version, 2001
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Bibliographic Info

Paper provided by Institute for Advanced Studies in its series Economics Series with number 96.

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Length: 31 pages
Date of creation: Feb 2001
Date of revision:
Handle: RePEc:ihs:ihsesp:96

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Keywords: Government budget; Taxation; Nominal asstes; Current account;

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References

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  1. Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-24, January.
  2. Turnovsky, Stephen J., 1996. "Fiscal policy, growth, and macroeconomic performance in a small open economy," Journal of International Economics, Elsevier, vol. 40(1-2), pages 41-66, February.
  3. Bianconi, Marcelo, 1999. "Intertemporal budget policies in an endogenous growth model with nominal assets," International Review of Economics & Finance, Elsevier, vol. 8(1), pages 25-43, January.
  4. Sergio Rebelo, 1999. "Long Run Policy Analysis and Long Run Growth," Levine's Working Paper Archive 2114, David K. Levine.
  5. Agell, J. & Persson, M., 2000. "On the Analytics of the Dunamic Laffer Curve," Papers 2000:5, Uppsala - Working Paper Series.
  6. Stephen J. Turnovsky, 1997. "International Macroeconomic Dynamics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262201119, December.
  7. Fisher, Walter H. & Bianconi, Marcelo, 2001. "Intertemporal Budget Policies and Macroeconomic Adjustment in a Small Open Economy," Economics Series 96, Institute for Advanced Studies.
  8. Jones, Larry E & Manuelli, Rodolfo E & Rossi, Peter E, 1993. "Optimal Taxation in Models of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 485-517, June.
  9. Slemrod,Joel, 1994. "Tax Progressivity and Income Inequality," Cambridge Books, Cambridge University Press, number 9780521465434, April.
  10. Calvo, Guillermo A, 2001. "Capital Markets and the Exchange Rate with Special Reference to the Dollarization Debate in Latin America," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 312-34, May.
  11. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
  12. Ireland, Peter N., 1994. "Supply-side economics and endogenous growth," Journal of Monetary Economics, Elsevier, vol. 33(3), pages 559-571, June.
  13. Bruce, Neil & Turnovsky, Stephen J, 1999. "Budget Balance, Welfare, and the Growth Rate: "Dynamic Scoring" of the Long-Run Government Budget," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(2), pages 162-86, May.
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Cited by:
  1. Fisher, Walter H. & Bianconi, Marcelo, 2001. "Intertemporal Budget Policies and Macroeconomic Adjustment in a Small Open Economy," Economics Series 96, Institute for Advanced Studies.
  2. Bianconi, Marcelo & Fisher, Walter H., 2011. "Intertemporal Budget Policies and Macroeconomic Adjustment in Indebted Open Economies," Economics Series 271, Institute for Advanced Studies.

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