Politically Optimal Fiscal Policy

Book Name : Politically Optimal Fiscal Policy

By by Irina Yakadina, Michael Kumhof

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Written by : by Irina Yakadina, Michael Kumhof

Subject Category : Economics

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Why do governments issue large amounts of debt? In what sense and for whom is such a policy optimal? We show that twisting the optimal taxation paradigm produces very reasonable predictions for debt and real interest rates. Adding an extra dimension of uncertainty about the political planning horizon gives rise to a positive and very plausible government debt-to-GDP ratio of about 55 percent in a model that otherwise predicts negative government debt. We quantify the impact of political uncertainty on steady state and business cycle dynamics. We illustrate how populist tax cuts can cause business cycle fluctuations. International Monetary Fund; March 2007 ISBN 9781451910858 Read online, or download in secure PDF or secure EPUB format Title: Politically Optimal Fiscal Policy Author: Irina Yakadina; Michael Kumhof Imprint: INTERNATIONAL MONETARY FUND Subject categories Economics > Economic history and conditions Business > International Business > Economics > Macroeconomics ISBNs 1451910851 9781451866322 9781451910858 9781452738017

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Economics - Economic history and conditions Business - International Business - Economics - Macroeconomics

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1451910851 - 9781451866322 - 9781451910858 - 9781452738017

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INTERNATIONAL MONETARY FUND

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