Fiscal Austerity in Ambiguous Times
This paper analyzes optimal fiscal policy with ambiguity aversion and endogenous government spending. We show that without ambiguity, optimal surplus-to-output ratios are acyclical and that there is no rationale for either reduction or further accumulation of public debt. In contrast, ambiguity abou...
Gespeichert in:
| Veröffentlicht in: | American economic journal. Macroeconomics 2019-01, Vol.11 (1), p.89-131 |
|---|---|
| Hauptverfasser: | , |
| Format: | Artikel |
| Sprache: | eng |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Tags: |
Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
|
| container_end_page | 131 |
|---|---|
| container_issue | 1 |
| container_start_page | 89 |
| container_title | American economic journal. Macroeconomics |
| container_volume | 11 |
| creator | Ferriere, Axelle Karantounias, Anastasios G. |
| description | This paper analyzes optimal fiscal policy with ambiguity aversion and endogenous government spending. We show that without ambiguity, optimal surplus-to-output ratios are acyclical and that there is no rationale for either reduction or further accumulation of public debt. In contrast, ambiguity about the cycle can generate optimally policies that resemble “austerity” measures. Optimal policy prescribes higher taxes in adverse times and front-loaded fiscal consolidations that lead to a balanced primary budget in the long run. This is the case when interest rates are sufficiently responsive to cyclical shocks, that is, when the intertemporal elasticity of substitution is sufficiently low. |
| doi_str_mv | 10.1257/mac.20160085 |
| format | Article |
| fullrecord | <record><control><sourceid>jstor_hal_p</sourceid><recordid>TN_cdi_hal_primary_oai_HAL_halshs_02084280v1</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><jstor_id>26621298</jstor_id><sourcerecordid>26621298</sourcerecordid><originalsourceid>FETCH-LOGICAL-c453t-26091479e84921aacaf0817e331c8c45d2d46a5a36d75268c265c15f8ebc6dd3</originalsourceid><addsrcrecordid>eNp90E1Lw0AQBuBFFKzVm1ch0Kups7OfOYZirVDw0vuy3Wzslqapu4nQf2-kWm-eZhge5oWXkHsKU4pCPTXWTRGoBNDigoxowUWuFBWX5x3UNblJaQsgmWRqRCbzkJzdZWWfOh9Dd8zCPiubdXjv2z5lq9D4dEuuartL_u5njslq_ryaLfLl28vrrFzmjgvW5SihoFwVXvMCqbXO1qCp8oxRpwdSYcWlFZbJSgmU2qEUjopa-7WTVcXG5PH0dmN35hBDY-PRtDaYRbk0wy1tkgEEzVHDJx345MQPsf3oferMtu3jfnAGETgIVWj9r6ISleRS8L9oF9uUoq_P-RTMd7VmqNb8VjvwhxPfpq6NZ4tSIsVCsy-sPXGi</addsrcrecordid><sourcetype>Open Access Repository</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>2162764654</pqid></control><display><type>article</type><title>Fiscal Austerity in Ambiguous Times</title><source>JSTOR Archive Collection A-Z Listing</source><source>American Economic Association Web</source><creator>Ferriere, Axelle ; Karantounias, Anastasios G.</creator><creatorcontrib>Ferriere, Axelle ; Karantounias, Anastasios G.</creatorcontrib><description>This paper analyzes optimal fiscal policy with ambiguity aversion and endogenous government spending. We show that without ambiguity, optimal surplus-to-output ratios are acyclical and that there is no rationale for either reduction or further accumulation of public debt. In contrast, ambiguity about the cycle can generate optimally policies that resemble “austerity” measures. Optimal policy prescribes higher taxes in adverse times and front-loaded fiscal consolidations that lead to a balanced primary budget in the long run. This is the case when interest rates are sufficiently responsive to cyclical shocks, that is, when the intertemporal elasticity of substitution is sufficiently low.</description><identifier>ISSN: 1945-7707</identifier><identifier>EISSN: 1945-7715</identifier><identifier>DOI: 10.1257/mac.20160085</identifier><language>eng</language><publisher>Pittsburgh: American Economic Association</publisher><subject>Deficit financing ; Economic models ; Economics and Finance ; Fiscal policy ; Government spending ; Humanities and Social Sciences</subject><ispartof>American economic journal. Macroeconomics, 2019-01, Vol.11 (1), p.89-131</ispartof><rights>Copyright American Economic Association Jan 2019</rights><rights>(c) 2019. Notwithstanding the ProQuest Terms and conditions, you may use this content in accordance with the associated terms available at https://research.stlouisfed.org/research_terms.html .</rights><rights>Distributed under a Creative Commons Attribution 4.0 International License</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c453t-26091479e84921aacaf0817e331c8c45d2d46a5a36d75268c265c15f8ebc6dd3</citedby><cites>FETCH-LOGICAL-c453t-26091479e84921aacaf0817e331c8c45d2d46a5a36d75268c265c15f8ebc6dd3</cites><orcidid>0009-0001-4231-461X</orcidid></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/26621298$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/26621298$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>230,314,780,784,803,885,3746,27922,27923,58015,58248</link.rule.ids><backlink>$$Uhttps://shs.hal.science/halshs-02084280$$DView record in HAL$$Hfree_for_read</backlink></links><search><creatorcontrib>Ferriere, Axelle</creatorcontrib><creatorcontrib>Karantounias, Anastasios G.</creatorcontrib><title>Fiscal Austerity in Ambiguous Times</title><title>American economic journal. Macroeconomics</title><description>This paper analyzes optimal fiscal policy with ambiguity aversion and endogenous government spending. We show that without ambiguity, optimal surplus-to-output ratios are acyclical and that there is no rationale for either reduction or further accumulation of public debt. In contrast, ambiguity about the cycle can generate optimally policies that resemble “austerity” measures. Optimal policy prescribes higher taxes in adverse times and front-loaded fiscal consolidations that lead to a balanced primary budget in the long run. This is the case when interest rates are sufficiently responsive to cyclical shocks, that is, when the intertemporal elasticity of substitution is sufficiently low.</description><subject>Deficit financing</subject><subject>Economic models</subject><subject>Economics and Finance</subject><subject>Fiscal policy</subject><subject>Government spending</subject><subject>Humanities and Social Sciences</subject><issn>1945-7707</issn><issn>1945-7715</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2019</creationdate><recordtype>article</recordtype><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><sourceid>AAFGM</sourceid><sourceid>ADZZV</sourceid><sourceid>AGAJT</sourceid><sourceid>AQTIP</sourceid><sourceid>AZQEC</sourceid><sourceid>PQCXX</sourceid><recordid>eNp90E1Lw0AQBuBFFKzVm1ch0Kups7OfOYZirVDw0vuy3Wzslqapu4nQf2-kWm-eZhge5oWXkHsKU4pCPTXWTRGoBNDigoxowUWuFBWX5x3UNblJaQsgmWRqRCbzkJzdZWWfOh9Dd8zCPiubdXjv2z5lq9D4dEuuartL_u5njslq_ryaLfLl28vrrFzmjgvW5SihoFwVXvMCqbXO1qCp8oxRpwdSYcWlFZbJSgmU2qEUjopa-7WTVcXG5PH0dmN35hBDY-PRtDaYRbk0wy1tkgEEzVHDJx345MQPsf3oferMtu3jfnAGETgIVWj9r6ISleRS8L9oF9uUoq_P-RTMd7VmqNb8VjvwhxPfpq6NZ4tSIsVCsy-sPXGi</recordid><startdate>20190101</startdate><enddate>20190101</enddate><creator>Ferriere, Axelle</creator><creator>Karantounias, Anastasios G.</creator><general>American Economic Association</general><general>Federal Reserve Bank of St. Louis</general><scope>AAYXX</scope><scope>CITATION</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FRNLG</scope><scope>F~G</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>M0C</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope><scope>AAFGM</scope><scope>ABLUL</scope><scope>ABPUF</scope><scope>ABSSA</scope><scope>ACIOU</scope><scope>ADZZV</scope><scope>AGAJT</scope><scope>AGSBL</scope><scope>AJNOY</scope><scope>AQTIP</scope><scope>AZQEC</scope><scope>BOUDT</scope><scope>CBHQV</scope><scope>PIMPY</scope><scope>PQCXX</scope><scope>PRINS</scope><scope>1XC</scope><scope>BXJBU</scope><scope>IHQJB</scope><scope>VOOES</scope><orcidid>https://orcid.org/0009-0001-4231-461X</orcidid></search><sort><creationdate>20190101</creationdate><title>Fiscal Austerity in Ambiguous Times</title><author>Ferriere, Axelle ; Karantounias, Anastasios G.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c453t-26091479e84921aacaf0817e331c8c45d2d46a5a36d75268c265c15f8ebc6dd3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2019</creationdate><topic>Deficit financing</topic><topic>Economic models</topic><topic>Economics and Finance</topic><topic>Fiscal policy</topic><topic>Government spending</topic><topic>Humanities and Social Sciences</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Ferriere, Axelle</creatorcontrib><creatorcontrib>Karantounias, Anastasios G.</creatorcontrib><collection>CrossRef</collection><collection>ProQuest Central (Corporate)</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>Business Premium Collection (Alumni)</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Global</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central Basic</collection><collection>ProQuest Central Essentials</collection><collection>Publicly Available Content Database</collection><collection>ProQuest Central China</collection><collection>Hyper Article en Ligne (HAL)</collection><collection>HAL-SHS: Archive ouverte en Sciences de l'Homme et de la Société</collection><collection>HAL-SHS: Archive ouverte en Sciences de l'Homme et de la Société (Open Access)</collection><collection>Hyper Article en Ligne (HAL) (Open Access)</collection><jtitle>American economic journal. Macroeconomics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Ferriere, Axelle</au><au>Karantounias, Anastasios G.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Fiscal Austerity in Ambiguous Times</atitle><jtitle>American economic journal. Macroeconomics</jtitle><date>2019-01-01</date><risdate>2019</risdate><volume>11</volume><issue>1</issue><spage>89</spage><epage>131</epage><pages>89-131</pages><issn>1945-7707</issn><eissn>1945-7715</eissn><abstract>This paper analyzes optimal fiscal policy with ambiguity aversion and endogenous government spending. We show that without ambiguity, optimal surplus-to-output ratios are acyclical and that there is no rationale for either reduction or further accumulation of public debt. In contrast, ambiguity about the cycle can generate optimally policies that resemble “austerity” measures. Optimal policy prescribes higher taxes in adverse times and front-loaded fiscal consolidations that lead to a balanced primary budget in the long run. This is the case when interest rates are sufficiently responsive to cyclical shocks, that is, when the intertemporal elasticity of substitution is sufficiently low.</abstract><cop>Pittsburgh</cop><pub>American Economic Association</pub><doi>10.1257/mac.20160085</doi><tpages>43</tpages><orcidid>https://orcid.org/0009-0001-4231-461X</orcidid><oa>free_for_read</oa></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 1945-7707 |
| ispartof | American economic journal. Macroeconomics, 2019-01, Vol.11 (1), p.89-131 |
| issn | 1945-7707 1945-7715 |
| language | eng |
| recordid | cdi_hal_primary_oai_HAL_halshs_02084280v1 |
| source | JSTOR Archive Collection A-Z Listing; American Economic Association Web |
| subjects | Deficit financing Economic models Economics and Finance Fiscal policy Government spending Humanities and Social Sciences |
| title | Fiscal Austerity in Ambiguous Times |
| url | https://sfx.bib-bvb.de/sfx_tum?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2025-01-09T19%3A04%3A10IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-jstor_hal_p&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Fiscal%20Austerity%20in%20Ambiguous%20Times&rft.jtitle=American%20economic%20journal.%20Macroeconomics&rft.au=Ferriere,%20Axelle&rft.date=2019-01-01&rft.volume=11&rft.issue=1&rft.spage=89&rft.epage=131&rft.pages=89-131&rft.issn=1945-7707&rft.eissn=1945-7715&rft_id=info:doi/10.1257/mac.20160085&rft_dat=%3Cjstor_hal_p%3E26621298%3C/jstor_hal_p%3E%3Curl%3E%3C/url%3E&disable_directlink=true&sfx.directlink=off&sfx.report_link=0&rft_id=info:oai/&rft_pqid=2162764654&rft_id=info:pmid/&rft_jstor_id=26621298&rfr_iscdi=true |