Optimal taxation in an RBC model: A linear-quadratic approach

Journal of Economic Dynamics and Control

Volumn 30, Issue 9-10, 2006, Pages 1445-1489

  Benigno, Pierpaolo ^a   Woodford, Michael ^b  

^a NEW YORK UNIVERSITY   (United States)

^b Och Spine at New York Presbyterian Hospitals   (United States)

Author keywords

Log linearization; Perturbation methods

Indexed keywords

EID: 33745918664     PISSN: 01651889     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jedc.2005.08.009     Document Type: Article

References (27)

1. Albanesi S. Comment on Benigno and Woodford optimal monetary and fiscal policy: a linear-quadratic approach. NBER Macroeconomics Annual 18 (2003) 333-350
2. Benigno P., and Woodford M. Inflation stabilization and welfare: the case of a distorted steady state. Journal of the European Economics Association 3 (2005) 121-138
3. Benigno, P., Woodford, M., 2006. Linear-quadratic approximation of optimal policy problems. In preparation.
4. Bertsekas D.P. Dynamic Programming and Stochastic Control (1976), Academic Press, New York
5. Chamley C. Optimal taxation of capital income in general equilibrium with infinite lives. Econometrica 54 (1986) 607-622
6. Chari V.V., Christiano L.J., and Kehoe P.J. Optimal fiscal policy in a business cycle model. Journal of Political Economy 102 (1994) 617-652
7. Chari V.V., Christiano L.J., and Kehoe P.J. Policy analysis in business cycle models. In: Cooley T.F. (Ed). Frontiers of Business Cycle Research (1995), Princeton University Press, Princeton
8. Chow G.C. Analysis and Control of Dynamic Economic Systems (1975), Wiley, New York
9. Christiano L.J., and Eichenbaum M. Current real-business-cycle theories and aggregate labor-market fluctuations. American Economic Review 82 (1992) 430-450
10. Hansen, L.P., Sargent, T.J., 2004. Recursive Models of Dynamic Linear Economies. Unpublished monograph.
11. Jin, H., Judd, K.L., 2002. Perturbation methods for general dynamic stochastic models. Unpublished manuscript.
12. Judd K.L. Redistributive taxation in a simple perfect foresight model. Journal of Public Economics 28 (1985) 59-83
13. Judd, K.L., 1989. Optimal taxation in dynamic stochastic economies. Unpublished manuscript.
14. Judd K.L. Approximation, perturbation and projection methods in economic analysis. In: Amman H.M., Rust J., and Kendrick D.A. (Eds). Handbook of Computational Economics vol. 1 (1996), North-Holland, Amsterdam
15. Judd K.L. Numerical Methods in Economics (1999), MIT Press, Cambridge
16. Kim J., and Henderson D.W. Inflation targeting and nominal-income-growth targeting: when and why are they suboptimal? Journal of Monetary Economics 52 (2005) 1463-1495
17. Kim J., and Kim H.S. Spurious welfare reversal in international business cycle models. Journal of International Economics 60 (2003) 471-500
18. Kim, J., Kim, S., Schaumburg, E., Sims, C.A., 2003. Calculating and using second order accurate solutions of discrete time dynamic equilibrium models. Unpublished manuscript.
19. Kwakernaak H., and Sivan R. Linear Optimal Control Systems (1972), Wiley, New York
20. Magill M.J.P. A local analysis of N-sector capital accumulation under uncertainty. Journal of Economic Theory 15 (1977) 211-218
21. McGrattan E.R. Solving the stochastic growth model by linear-quadratic approximation. Journal of Business and Economic Statistics 8 (1990) 41-43
22. Sargent T.J. Macroeconomic Theory (1987), Academic Press, New York
23. Schmitt-Grohé S., and Uribe M. Solving dynamic general equilibrium models using a second-order approximation to the policy function. Journal of Economic Dynamics and Control 28 (2004) 755-775
24. Schmitt-Grohé S., and Uribe M. Optimal fiscal and monetary policy under sticky prices. Journal of Economic Theory 114 (2004) 198-230
25. Telser L.G., and Graves R.L. Functional Analysis in Mathematical Economics: Optimization over Infinite Horizons (1972), University of Chicago Press, Chicago
26. Woodford, M., 2002. Inflation stabilization and welfare. Contributions to Macroeconomics 2, article 1. (Online at 〈www.bepress.com〉.)
27. Woodford M. Interest and Prices: Foundations of a Theory of Monetary Policy (2003), Princeton University Press, Princeton