Fiscal policy and tax collection lags: stability, cycles and chaos
A simple dynamic IS-LM model with "balanced budget" and money financing deficit can show, in the presence of realistic tax collection lags, regular and chaotic cycles depending on the "mix" of fiscal policies. We argue that also rigid and transparent expenditure limits which an increasing number of countries have recently adopted, could be ineffective in terms of stability if the role of collection lags is neglected. Moreover also the "dimension" of the public intervention in the economy matters for stability, especially as a determinant of chaotic behaviours.
|Date of creation:||01 Jan 2003|
|Contact details of provider:|| Postal: Via Cosimo Ridolfi, 10 - 56124 PISA|
Phone: +39 050 22 16 466
Fax: +39 050 22 16 384
Web page: http://www.ec.unipi.it
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:pie:dsedps:2003/15. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.