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"A Fiscal Policy Rule for
Stabilization," February 1999, unpublished.
pdf file (119KB).
Abstract
A tax rate rule for stabilization purposes is
proposed in this paper. Stochastic simulation results suggest that this
rule would be a considerable help to monetary policy in its
stabilization effort.
Comments
The timing of this paper is poor, since at the moment (February 1999)
there seems little
need for U.S. monetary policy to be helped. However, if in the future there
are some bad shocks, a tax rate rule of the kind examined in this paper
may be of help.
The multiplier results in this paper can be duplicated on this
site. Chapter 2
of The MC2 Model Workbook explains how to do
this--Chapter 2, MC2 Workbook.
The tax rate rule is used for some of the results in
.