Please use this identifier to cite or link to this item:
http://hdl.handle.net/10071/9505
Author(s): | Gasteiger, E. Zhang, S. |
Date: | 2014 |
Title: | Anticipation, learning and welfare: the case of distortionary taxation |
Volume: | 39 |
Pages: | 113-126 |
ISSN: | 0165-1889 |
Keywords: | Fiscal policy Adaptive learning Oscillations Welfare |
Abstract: | We study the impact of anticipated fiscal policy changes in a Ramsey economy where agents form long-horizon expectations using adaptive learning. We extend the existing framework by introducing distortionary taxes as well as elastic labor supply, which makes agents' decisions non-predetermined but more realistic. We detect that the dynamic responses to anticipated tax changes under learning have oscillatory behavior that can be interpreted as self-fulfilling waves of optimism and pessimism emerging from systematic forecast errors. Moreover, we demonstrate that these waves can have important implications for the welfare consequences of fiscal reforms |
Peerreviewed: | Sim |
Access type: | Open Access |
Appears in Collections: | BRU-RI - Artigos em revistas científicas internacionais com arbitragem científica |
Files in This Item:
File | Description | Size | Format | |
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pre_print_Journal_of_Economic_Dynamics_and_Control.pdf | 413 kB | Adobe PDF | View/Open |
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