Patrì, Stefano and Correani, Luca and Di Dio, Fabio (2013) Optimal Fiscal Policy in a Simple Macroeconomic Context. Working paper del Dipartimento di Metodi e modelli per l'economia il territorio e la finanza (111). Dipartimento di Metodi e modelli per l'economia il territorio e la finanza MEMOTEF, Sapienza Università di Roma, Roma.
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Abstract
This article derives optimal fiscal rules within a stochastic model of Keynesian type in the context of Poole (1970) analysis. By using optimal control theory and applying the Hamilton-Jacoby-Bellman equation, we extend the original Poole results concerning the output stabilization properties of monetary policy to the case of fiscal policy. In particular, we look for the optimal setting of government expenditure and lump-sum taxation in the case that the fiscal authority wishes to keep the product close to a reference value and that the economy is assumed to be affected by stochastic disturbances of real and/or monetary type. According to the findings an optimal government expenditure rule is on average preferable to a taxation rule whatever the source of disturbances.
| Item Type: | Book |
|---|---|
| Subjects: | 500 Scienze naturali e Matematica > 510 Matematica > 519 Probabilità e Matematica applicata > 519.6 Ottimizzazione matematica |
| Depositing User: | Dr Stefano Patrì |
| Date Deposited: | 17 May 2013 09:45 |
| Last Modified: | 19 Jun 2013 10:15 |
| URI: | http://eprints.bice.rm.cnr.it/id/eprint/5261 |
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