nep-dge New Economics Papers
on Dynamic General Equilibrium
Issue of 2005‒08‒03
two papers chosen by
Christian Zimmermann
University of Connecticut

  1. Modern Business Cycle Analysis By Jeremy Greenwood
  2. Some Welfare Implications of Optimal Stabilization Policy in an Economy with Capital and Sticky Prices By Tatiana Damjanovic; Charles Nolan

  1. By: Jeremy Greenwood (University of Rochester)
    Abstract: A discussion of the importance for economics of Kydland and Prescott's (1982) classic "Time to Build and Aggregate Fluctuations". A report submitted to The Royal Swedish Academy of Sciences in support of the The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for Finn E. Kydland and Edward C. Prescott.
    Keywords: Kydland and Prescott (1982), Business Cycle Analysis, Quantitative Theory, Nobel Prize in Economics
    JEL: B22 C68 E13 E32
    Date: 2005–07
  2. By: Tatiana Damjanovic; Charles Nolan
    Abstract: In this paper we review and extend some of the key lessons that seem to be emerging from the Ramsey-inspired theory of dynamic optimal monetary and fiscal policies. We construct measures of the key distortions in our economy; we label these ‘dynamic wedges’. Inflation, actual or anticipated, distorts these wedges in the present period, it shrinks the tax base and increases the deadlweight loss. We show that, if possible, labour as well as capital ought to be subsidized in steady state. We point to a number of extensions to the Ramsey literature that may help in the formulation of actual policy.
    Keywords: Optimal taxation, aggregative monetary and fiscal policies.
    JEL: E31 E61 E62 H21
    Date: 2005–07

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