A common criticism of balanced budget fiscal rules is that they increase the consumption volatility of financially constrained households who are unable to smooth consumption. This paper evaluates the welfare consequences of simple fiscal rules in a model of a small commodity-exporting country with a share of financially constrained households, where fiscal policy takes the form of transfers. A main finding is that balanced budget rules for commodity...
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INFORMATION
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2017/04/25
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Document de travail de recherche sur les politiques
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WPS8035
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1
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1
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2017/04/25
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Disclosed
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Consumption smoothing and shock persistence : optimal simple fiscal rules for commodity exporters
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commodity price shock