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What Microeconomics Teaches Us about the Dynamic Macro Effects of Fiscal Policy

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  • Kotlikoff, Laurence J

Abstract

This paper reviews some recent findings on fiscal policy based on the Auerbach-Kotlikoff dynamic life cycle simulation model. The model contains fifty-five overlapping generations and solves for the economy's perfect foresight transition path. The model can handle simultaneous changes in a wide variety of fiscal policies. It yields quite surprising results about the timing of crowding out, the potential self-financing nature of investment incentives, the fundamentally noneconomic and misleading nature of official deficits, and the potential inefficiencies associated with additional capital formation. Copyright 1988 by Ohio State University Press.

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  • Kotlikoff, Laurence J, 1988. "What Microeconomics Teaches Us about the Dynamic Macro Effects of Fiscal Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(3), pages 479-495, August.
    • Handle: RePEc:mcb:jmoncb:v:20:y:1988:i:3:p:479-95
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    Cited by:

    1. Isidro Hernández Rodríguez, 2015. "Economía política de la tributación en Colombia," Books, Universidad Externado de Colombia, Facultad de Economía, edition 1, number 70.

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