IDEAS home Printed from https://ideas.repec.org/a/mcb/jmoncb/v26y1994i2p171-81.html
   My bibliography  Save this article

Debt Restructuring and the Time Consistency of Optimal Policies

Author

Listed:
  • Faig, Miquel

Abstract

Clever debt restructuring ensures that the optimal taxes on the purchase of consumption goods and on labor income are time consistent even if the government chooses public consumption and public investment. For this result, two types of debt are needed: claims on consumption goods (debt indexed by the gross-of-tax consumption prices) and claims on leisure (debt indexed by the net-of-tax wage rate). This rescues Robert E. Lucas and Nancy L. Stokey (1983) from the criticism that debt restructuring cannot ensure time consistency when the government chooses public consumption or public investment. This paper analyzes a closed economy. Copyright 1994 by Ohio State University Press.

Suggested Citation

  • Faig, Miquel, 1994. "Debt Restructuring and the Time Consistency of Optimal Policies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(2), pages 171-181, May.
    • Handle: RePEc:mcb:jmoncb:v:26:y:1994:i:2:p:171-81
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0022-2879%28199405%2926%3A2%3C171%3ADRATTC%3E2.0.CO%3B2-R&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Begoa Domnguez Manzano, 2000. "Time Consistency Of Optimal Fiscal Policy In An Endogenous Growth Model," Computing in Economics and Finance 2000 69, Society for Computational Economics.
    2. Begona Dominguez Manzano, 2005. "Reputation in a Model with a Limited Debt Structure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(3), pages 600-622, July.
    3. Dominguez, Begona, 2007. "On the time-consistency of optimal capital taxes," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 686-705, April.
    4. Begoña Domínguez, 2020. "Sustaining Ramsey plans with one-period bonds," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(2), pages 387-410, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mcb:jmoncb:v:26:y:1994:i:2:p:171-81. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley-Blackwell Digital Licensing or Christopher F. Baum (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.