Asset Price Targeting Government Spending and Equilibrium Indeterminacy in A Sticky-Price Economy
This study investigates aggregate implications of fiscal policy that responds to asset price fluctuations. In our sticky-price model, the monetary authority follows a Taylor rule and the fiscal authority follows a rule that the target of government spending is asset prices and responds negatively to the asset price fluctuations. It is shown that government spending that targets asset prices is a source of equilibrium indeterminacy.
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- Fukuda, Shin-ichi & Yamada, Junji, 2011.
"Stock price targeting and fiscal deficit in Japan: Why did the fiscal deficit increase during Japan’s lost decades?,"
Journal of the Japanese and International Economies,
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- Shin-ichi Fukuda & Junji Yamada, 2011. "Stock Price Targeting and Fiscal Deficit in Japan: Why Did the Fiscal Deficit Increase . during Japan's Lost Decades?," CIRJE F-Series CIRJE-F-819, CIRJE, Faculty of Economics, University of Tokyo.
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