In this paper, we adopt a Ramsey optimal approach to identify the combination of income taxes, public expenditure, and inflation designed to achieve a fiscal consolidation. In contrast with empirical contributions that emphasize the benefits of expenditure-based consolidations, the optimal policy calls for increases in taxes and inflation. Strong monetary accommodation is quite beneficial relative to a situation where the Central Bank is only concerned with inflation stability and the inflation target is defined as a ceiling, as in the Eurozone.

Cardani, R., Menna, L., Tirelli, P. (2020). The optimal policy mix to achieve public debt consolidation. MACROECONOMIC DYNAMICS, 24(1), 113-129 [10.1017/S1365100518000433].

The optimal policy mix to achieve public debt consolidation

Cardani, R
;
Menna, L;Tirelli, P
2020

Abstract

In this paper, we adopt a Ramsey optimal approach to identify the combination of income taxes, public expenditure, and inflation designed to achieve a fiscal consolidation. In contrast with empirical contributions that emphasize the benefits of expenditure-based consolidations, the optimal policy calls for increases in taxes and inflation. Strong monetary accommodation is quite beneficial relative to a situation where the Central Bank is only concerned with inflation stability and the inflation target is defined as a ceiling, as in the Eurozone.
Articolo in rivista - Articolo scientifico
Fiscal Consolidation; Limited Asset Market Participation; Ramsey Fiscal Policy;
English
19-lug-2018
2020
24
1
113
129
none
Cardani, R., Menna, L., Tirelli, P. (2020). The optimal policy mix to achieve public debt consolidation. MACROECONOMIC DYNAMICS, 24(1), 113-129 [10.1017/S1365100518000433].
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/222830
Citazioni
  • Scopus 6
  • ???jsp.display-item.citation.isi??? 6
Social impact