Three essays on the effects of fiscal policy: Theory and evidence.

摘要

This dissertation investigates the effects of government debt accumulation and tax foresight on the macroeconomy. In the first essay (joint with Eric Leeper and Michael Plante), government spending, lump-sum transfers, and distortionary taxation on labor and capital income and on consumption expenditures are fit to U.S. data under rich specifications of fiscal policy rules to obtain several results. First, the best-fitting model allows many fiscal instruments to respond to debt. Second, responses of aggregates to fiscal policy shocks under rich rules vary considerably from responses where only non-distortionary fiscal instruments finance debt. Third, in the short run, all fiscal instruments except labor taxes react strongly to debt, but long-run intertemporal financing comes from all components of the government's budget constraint.;In the second essay (joint with Shu-Chun Yang), the extent of crowding out by U.S. government debt is estimated using a New Keynesian model that accounts for the interaction between monetary and fiscal policies. The estimation finds that whether private investment is crowded in or out in the short term depends on the fiscal or monetary shock that triggers debt accumulation. Contrary to the conventional view of crowding out, no systematic relationship among debt, the real interest rate, and investment exists. Over longer horizons, distortionary financing is important for the negative investment response to a debt expansion.;The third essay investigates the effects of tax foresight on the optimal discretionary monetary policy in the canonical New Keynesian model. The optimal policy calls for the central bank to respond to tax news by moving the interest rate in the opposite direction from the optimal response to a tax realization. Standard Taylor-type rules do not produce the same interest rate movements. When the monetary authority has partial information about the state of the economy, tax foresight's presence makes the central bank unable to correctly estimate exogenous disturbances from its observable variables. This causes the monetary authority to induce history dependence in aggregates and makes the interest rate serially correlated.