Tax distortions and the case for price stability

6Citations
Citations of this article
11Readers
Mendeley users who have this article in their library.
Get full text

Abstract

We investigate the case for price stability in the general version of the New Keynesian (NNS) model with capital and several shocks. The model includes, in addition to the standard imperfect competition and monetary frictions, a non-trivial, endogenous tax distortion. We find that the case for perfect price stability is not significantly weakened. Optimal policy tolerates a small amount of output gap and price variability by reacting less strongly to supply and fiscal shocks in comparison to a policy that aims at perfect price stabilization. © 2004 Elsevier B.V. All rights reserved.

Cite

CITATION STYLE

APA

Collard, F., & Dellas, H. (2005). Tax distortions and the case for price stability. Journal of Monetary Economics, 52(1), 249–273. https://doi.org/10.1016/j.jmoneco.2004.08.003

Register to see more suggestions

Mendeley helps you to discover research relevant for your work.

Already have an account?

Save time finding and organizing research with Mendeley

Sign up for free