Working Papers in full text
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
All
Other research-related activities and publications of the IMF can be found at IMF Research
|
Free Email Notification
Receive emails when we post new
items of interest to you.
Subscribe or
Modify your profile
|
|
|
|
Fiscal Foresight and Information Flows
|
Author/Editor: |
Leeper, Eric M. | Walker, Todd B. | Yang, Shu-Chun S. |
| Authorized for Distribution: |
June 1, 2012 |
|
Electronic Access: |
Free Full Text (PDF file size is 1,607KB)
Use the free Adobe Acrobat Reader to view this PDF file.
|
|
|
|
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
|
|
Summary: News - or foresight - about future economic fundamentals can create rational expectations equilibria with non-fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react. Using tax policies as a leading example of foresight, simple theory makes transparent the economic behavior and information structures that generate non-fundamental equilibria. Econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes; biases are quantitatively important when two canonical theoretical models are taken as data generating processes. Both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized information flows. Different methods for extracting or hypothesizing the information flows are discussed and shown to be alternative techniques for resolving a non-uniqueness problem endemic to moving average representations.
|
|
|
|
Order a print copy
|
|
Series: |
Working Paper No. 12/153 |
|
Subject(s): |
Asset prices | Economic forecasting | Fiscal policy | Forecasting models | Tax policy |
|
Author's keyword(s): |
News | anticipated taxes | non-fundamental representation | identified VARs |
|
|
|
|
| |
Published: |
|
June 1, 2012 |
|
|
|
|
| |
|
|
|
|
Format: |
|
Paper |
| |
Stock No: |
|
WPIEA2012153 |
|
Pages: |
|
64 |
| |
Price: |
|
US$18.00 (Academic Rate: US$18.00 )
|
|
|
|
|
|
|
