Optimal Dynamic Fiscal Policy with Applications to Chile and Norway

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dc.description.abstract New fiscal institutions, fiscal policy regimes, and fiscal rules are adopted by governments worldwide, aiming at improved fiscal policy sustainability, output stabilization, and resilience of public finances to political pressures. However, little research is available on the analytical foundations of real-world fiscal rules and policies. This paper develops an optimal dynamic stochastic framework to derive a fiscal policy function for a benevolent government, with preferences defined by inter-temporal government spending smoothing, counter-cyclical output stabilization, and government spending habits. Chile's and Norway's actual fiscal policy rules are modelled and compared to the benchmark government rule, by evaluating the macroeconomic and welfare effects of exogenous shocks in the two countries and under the benchmark rule. en
dc.title Optimal Dynamic Fiscal Policy with Applications to Chile and Norway en
dc.contributor.author González, Gustavo
dc.contributor.author Muñoz, Francisco
dc.contributor.author Schmidt-Hebbel, Klaus
dc.date.accessioned 2018-02-21T19:12:39Z
dc.date.available 2018-02-21T19:12:39Z
dc.date.issued 2018-02-21
dc.identifier.uri http://lacer.lacea.org/handle/123456789/64699
lacea.language.supported en
dc.description Working paper
dc.language.iso en
dc.subject Optimal Fiscal Policy
dc.subject Fiscal Rules
dc.subject Chile
dc.subject Norway
dc.type Working Paper

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