Recent developments in the Dynamic Fiscal Policy literature

Shutterstock.com

Article Highlights

  • 35 years later: what have we learned from Dynamic Fiscal Policy?

    Tweet This

  • New Tax Notes article: what have we learned from generational accounting?

    Tweet This

In this article, Gorry and Hassett review the major contributions of the Auerbach- Kotlikoff model of dynamic fiscal policy and explore highlights of subsequent research based on dynamic general equilibrium models of fiscal policy.

A. Introduction
With the publication of Dynamic Fiscal Policy in 1987, Alan J. Auerbach and Laurence J. Kotlikoff opened up a new, major area of research into the long-run effects of fiscal policy on the economy. Their work was one of the first efforts to fully explore researchers’ ability to analyze highly complex dynamic economic models through the use of modern computers. They developed a framework that could estimate the impact of fiscal policy on capital formation and economic growth. Further, in a strikingly original contribution at the time, they examined intergenerational transfers associated with policies that often had different effects on each of the 55 overlapping generations of individuals in their model. Their dynamic framework also allowed the evaluation of the welfare gains and losses of a wide variety of proposed policy changes to the economy.

Read the full PDF here.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Kevin A.
Hassett

 

Aspen
Gorry

What's new on AEI

AEI Election Watch 2014: What will happen and why it matters
image A nation divided by marriage
image Teaching reform
image Socialist party pushing $20 minimum wage defends $13-an-hour job listing
AEI on Facebook
Events Calendar
  • 20
    MON
  • 21
    TUE
  • 22
    WED
  • 23
    THU
  • 24
    FRI
Monday, October 20, 2014 | 2:00 p.m. – 3:30 p.m.
Warfare beneath the waves: The undersea domain in Asia

We welcome you to join us for a panel discussion of the undersea military competition occurring in Asia and what it means for the United States and its allies.

Tuesday, October 21, 2014 | 8:30 a.m. – 10:00 a.m.
AEI Election Watch 2014: What will happen and why it matters

AEI’s Election Watch is back! Please join us for two sessions of the longest-running election program in Washington, DC. 

Wednesday, October 22, 2014 | 1:00 p.m. – 2:30 p.m.
What now for the Common Core?

We welcome you to join us at AEI for a discussion of what’s next for the Common Core.

Event Registration is Closed
Thursday, October 23, 2014 | 10:00 a.m. – 11:00 a.m.
Brazil’s presidential election: Real challenges, real choices

Please join AEI for a discussion examining each candidate’s platform and prospects for victory and the impact that a possible shift toward free-market policies in Brazil might have on South America as a whole.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.