Joint Implications of Consumption and Tax Smoothing

Singapore's recurrent budget surplus: The role of conservative growth forecasts

“…Bohn (1998) used Barro's (1986) formulation to examine the response of primary budget surplus to debt-income ratio. Studies such as Cashin, Haque, and Olekalns (2002), Fisher and Kingston (2005), Ghosh (1995), Huang and Lin (1993), Kula (2004), Olekalns (1997), Serletis and Schorn (1999) examine whether the fiscal deficit is informative of future changes in government expenditures.…”

“…In this case the coefficient of the output gap (Y-Y * ) substantially over estimates the average government expenditure rate of about 15% observed over 1991-2005. The coefficient of the expenditure gap (G-G * ) is also much larger in magnitude than Table 2 Forecast and actual growth rates of GDP, 1990-2005 Forecast growth rate when budget was set (%)…”

Fiscal Sustainability: A 21st Century Guide for the Perplexed

“…al. (2001) suggest that base broadening and other tax reforms can substantially boost growth.15 The idea of tax smoothing continues to receive attention in the optimal fiscal policy literature; see, for exampleKingston (1991),Lloyd-Ellis, Zhan, and Zhu (2005), andFisher and Kingston (2005). WhileLucas and Stokey (1983) broadened the discussion to include optimal sovereign defaults, that outcome is not emphasized in this paper.16 Of course, governments may vary tax rates countercyclically.…”

The Perils of Tax Smoothing: Sustainable Fiscal Policy with Random Shocks to Permanent Output

“…The idea of tax smoothing continues to receive attention in the optimal fiscal policy literature; see, for example(Kingston, 1991),(Lloyd-Ellis, Zhan, Zhu, 2005), and(Fisher, Kingston, 2005). Other recent papers that use a loss function to approximate underlying consumer welfare includeBenigno and Woodford (2003) andAngeletos (2003).…”