On the Optimality of U.S. Fiscal Policy: 1960-2010

摘要: This paper assesses the optimality of U.S. fiscal policy from 1960 to 2010. With this purpose, we present a tractable neoclassical economy with benevolent government and characterize time-consistent, optimal policy. We then compare model's prescriptions for income tax rates expenditure their empirical counterparts observed in period. find that taxation consumption were line 2000. However, starting early 2000s rest decade, trended direction opposite prescribed by model. In particular, declined below rates, expenditures as share GDP sharply increased above levels. By way example, while our model prescribes 10% reduction expenditure-to-GDP ratio between 2001 2010, 23%