Fiscal policy, debt constraint and expectations-driven volatility

Endogenous labour supply, endogenous lifetime and economic development

“…None of the articles belonging to this literature, however, deals with health expenditure and endogenous longevity, and few of them concentrate on the study of the dynamics of a general equilibrium economy with productive public spending (Cazzavillan, 1996) or unproductive public spending (Guo and Lansing, 1998;Nourry et al, 2013;Nishimura et al, 2015) focusing just on the local analysis.…”

Introduction to financial frictions and debt constraints

“…There are of course a number a contributions dealing with the interplay between debt, capital and dynamics, but the role of the government budget constraint is not directly discussed as constant tax rates are considered. 8 In the paper contained in this special section, Nishimura et al [31] consider a Ramsey model in which a constant level of public spending is financed through debt and distortionary taxation on income and debt earnings. To avoid insolvency of public debt, they assume a debt constraint defined as a constant ratio of debt over GDP.…”

“…In this special section, Nishimura et al [31] show that such an extended non-linear tax rule can be a source of macroeconomic instability related to selffulfilling expectations on the future income tax rate. Indeed, if agents expect an increase of the future tax rate, they will invest less, implying a lower income in the future.…”

Government Debt, Fiscal Rules and Singular Growth Dynamics

“…Papers in this strand of literature (see Schmitt-Grohe and Uribe (1997), or a recent contribution Nishimura et al (2015)), find that a budget balance rule can be destabilizing and a source of (permanent) indeterminacy. In all those papers the governement deficit is potentially financed by taxes only.…”