Arbeitspapier
Countercyclical taxation and price dispersion
In this paper, we explore the benefits from a supply-side oriented fiscal tax policy within the framework of a New Keynesian DSGE model. We show that countercyclical tax rules, which are contingent on the observed welfare gap or on the cost-push shock and levied on value added, remarkably reduce the adverse impact of cost-push shocks on welfare. We state that the tax rule establishes a path for the evolution of marginal cost at the firm level that largely prevents built up of price dispersion. We highlight that this tax policy is also effective under a balancedbudget regime. Hence, fiscal policy can disencumber monetary policy in the light of cost-push shocks.
- Language
-
Englisch
- Bibliographic citation
-
Series: W.E.P. - Würzburg Economic Papers ; No. 78
- Classification
-
Wirtschaft
Business Fluctuations; Cycles
Policy Objectives; Policy Designs and Consistency; Policy Coordination
Fiscal Policy
- Subject
-
Countercyclical fiscal policy
welfare costs
nominal rigidities
Antizyklische Finanzpolitik
Soziale Kosten
Wohlfahrtseffekt
Preisspanne
Dynamisches Gleichgewicht
Ungleichgewichtstheorie
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Mayer, Eric
Grimm, Oliver
- Event
-
Veröffentlichung
- (who)
-
University of Würzburg, Department of Economics
- (where)
-
Würzburg
- (when)
-
2008
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Mayer, Eric
- Grimm, Oliver
- University of Würzburg, Department of Economics
Time of origin
- 2008
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