Kevin X.D. Huang,Qinglai Meng,薛涧坡——JOURNAL OF MONEY CREDIT AND BANKING:Balanced-Budget Rules and Aggregate Instability: The Role of Endogenous Capita...
时间:2018-12-01
Schmitt-Grohe and Uribe (1997) demonstrate that a balanced-budget fiscal policy can induce aggregate instability unrelated to economic fundamentals. The empirical relevance of this result has been challenged by subsequent studies. In this paper we show, both analytically and numerically, that such extrinsic instability is an empirically robust plausibility associated with a balanced-budget rule once endogenous capital utilization is taken into consideration. This suggests that the design or oper