We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
INDETERMINACY AND PERIOD LENGTH UNDER BALANCED BUDGET RULES.
- Authors
Anagnostopoulos, Alexis; Giannitsarou, Chryssi
- Abstract
We analyze the importance of the frequency of decision making for macroeconomic dynamics, in the context of a simple, well-known business cycle model with balanced budget rules. We explain how the frequency of decision making (period length) and the measurement unit of time (calibration frequency) differ and examine how local stability is affected by changes in the period length. We find that as the period grows longer, indeterminacy occurs less often. This may have significant quantitative implications: for the model at hand, there is a wide range of economically relevant labor tax rates (from 30% to 38%) for which the continuous-time model gives indeterminacy, whereas the discrete-time model has determinate dynamics.
- Subjects
BUDGET; ECONOMIC decision making; MACROECONOMICS; ECONOMIC research; MATHEMATICAL models of business cycles; ECONOMIC equilibrium; ECONOMIC development
- Publication
Macroeconomic Dynamics, 2013, Vol 17, Issue 4, p898
- ISSN
1365-1005
- Publication type
Article
- DOI
10.1017/S1365100511000745