We study the interaction between monetary and fiscal policies in a Ramsey-Sidrauski model augmented with environmental capital. Equilibrium solutions are studied through “Green Golden Rule”. Despite non-separability of money utility intertemporally non-separable preferences, is environmentally neutral. Policy impacts environment via marginal rate transformation rather than substitution consumpt...

This paper determines optimal public debt in a life cycle model with incomplete markets that matches the empirically observed variation consumption, labor, and savings. We find savings—not debt—equal to 168 percent of output is optimal, primarily due influence on household decision-making. By inducing lower interest rate, savings slow consumption leisure growth over an average household’s lifet...

Colicin E3 is a cytotoxic ribonuclease that specifically cleaves 16S rRNA at the ribosomal A-site to abolish protein synthesis in sensitive Escherichia coli cells. We have performed extensive mutagenesis of the 96-residue colicin E3 cytotoxic domain (E3 rRNase), assayed mutant colicins for in vivo cytotoxicity, and tested the corresponding E3 rRNase domains for their ability to inactivate ribos...

We study optimal monetary policy in an analytically tractable heterogeneous agent New Keynesian model with rich cross-sectional heterogeneity. Optimal differs from a representative benchmark because can affect consumption inequality, by stabilizing risk arising both idiosyncratic shocks and unequal exposures to aggregate shocks. The trade-off between productive efficiency, price stability is su...

Motivated by the effects of COVID-19 pandemic, we present a theory Keynesian supply shocks: shocks that reduce potential output in sector economy, but that, reducing demand other sectors, ultimately push aggregate activity below potential. A shock is more likely when elasticity substitution between sectors relatively low, intertemporal high, and markets are incomplete. Fiscal policy can display...

The challenge for stabilization policy presented by the COVID-19 pandemic stems above all from disruption of circular flow payments, resulting in a failure what Keynes (1936) calls “effective demand.” As consequence, economic activity many sectors can be inefficiently low, and interest-rate cannot eliminate distortions—not because limit on extent to which interest rates reduced, but reductions ...

We study optimal time-consistent monetary and fiscal policy in a New Keynesian model where occasional declines agents’ confidence give rise to persistent liquidity trap episodes. Insights from widely studied fundamental-driven traps are not useful guide for enhancing welfare this model. Raising the inflation target, appointing an inflation-conservative central banker, or allowing use of governm...

Abstract We examine the stance of fiscal policy for 32 OECD countries from 1986 to 2023 by comparing each country-year observation signs output gap and change in cyclically adjusted budget balance. find that policies are often pro-cyclical. test possible explanations using comparative statistics observations with pro- counter-cyclical policies. Our evidence suggests rules institutional quality ...

We show that in models in which labor services are supplied jointly with human capital, the Chamley and Judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale. Moreover, for a class of widely used preferences, consumption taxes are zero in the limit as well. However, we show by the construction of two ex...

We study the cyclical behavior of fiscal policy to explain why some countries exhibit pro-cyclical fiscal policy stances–being expansionary in good times and contractionary in bad times. We develop a model that links the polarization of preferences over fiscal spending to the pro-cyclicality bias. We then present evidence that social polarization as measured by income inequality and educational...