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Alesina Drazen (1991) - Why Are Stabilizations Delayed (view source)
Revision as of 00:56, 8 March 2011
, 00:56, 8 March 2011→Distortionary Taxes or Monetization
A higher <math>\gamma\,</math> implies an earlier stabilization:
*A higher <math>\gamma\,</math> means more a higher proportion of expenditure, including interest payments, is covered by distortionary taxes
*There are two effects, and the first dominates:
**A higher <math>\gamma\,</math> gives a greater distortion for a given deficit which induces an earlier concession
**A higher <math>\gamma\,</math> means debt rises more slowly and hence distortions which induce concession grow slower
===Costs of Distortions===
