rule of thumb

Optimal fiscal policy in a DSGE model with heterogeneous agents

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Version Date: 
Sep 2012

This paper solves optimal scal policy in a simple real business cycle model with
agent heterogeneity. Introducing rule-of-thumb behaviour in some agents, I show
that the steady state optimal tax on capital in the long run should always be
zero regardless of the governments favouritism towards particular agents. Over

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