Download This PaperOptimal Fiscal Action in an Economy with Sovereign Premia and Without Monetary Independence: An Application to Italy
49 Pages Posted: 1 May 2013
Date Written: April 30, 2013
Abstract
We welfare rank various tax-spending policies. The setup is a New Keynesian model of a semi-small open economy featuring sovereign risk premia and loss of monetary policy independence. The model is calibrated to match data from the Italian economy 2001-2011. We compute various optimized state-contingent tax-spending policy rules when the policy aim is shock stabilization and/or debt consolidation.
Keywords: feedback policy rules, New Keynesian, sovereign premia
JEL Classification: E600, F300, H600
Suggested Citation: Suggested Citation
Philippopoulos, Apostolis and Varthalitis, Petros and Vassilatos, Vanghelis, Optimal Fiscal Action in an Economy with Sovereign Premia and Without Monetary Independence: An Application to Italy (April 30, 2013). CESifo Working Paper Series No. 4199, Available at SSRN: https://ssrn.com/abstract=2258318 or http://dx.doi.org/10.2139/ssrn.2258318
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