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Federal Reserve Bank of Cleveland
Working Papers (Old Series)
Optimal fiscal policy when public capital is productive: a business- cycle perspective
Kevin J. Lansing
Abstract

An examination of the business cycle implications of productive public capital in a two-sector, dynamic general-equilibrium model with optimal fiscal policy. In simulations, public investment and public consumption move procyclically, and the capital tax is more variable than the labor tax--features also observed in annual U.S. data.


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Kevin J. Lansing, Optimal fiscal policy when public capital is productive: a business- cycle perspective, Federal Reserve Bank of Cleveland, Working Papers (Old Series) 9406, 1994.
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Keywords: Capital ; Fiscal policy
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