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Cyclical Properties and Welfare of Time-Consistent Fiscal Policies


Time: 10:00 am- 11:30 am, Nov. 8th, 2023

Speaker: Zhigang Feng

(University of Nebraska-Omaha)

Venue: 359s, Overseas Exchange Center, Peking University

Platform: Tencent Meeting

Link: https://meeting.tencent.com/dm/j256hfxIZAbR

Meeting ID: 370-4954-9915



In this paper we are concerned with cyclical properties and welfare of time-consistent fiscal policies under various scenarios with internal and external public debt, and political turnover. Aggregate taxation and public expenditure must accommodate productivity shocks for elastic factor supplies, the sustainability of the public debt and manipulation of the bond price, and the added impact of political cycles and other structural shocks to aggregate social preferences. For our baseline economy, fiscal policy is mildly pro-cyclical under external debt, and highly pro-cyclical under internal debt. A political cycle in taxation could be welfare improving, and adds substantially more volatility to economic aggregates under external debt. A political cycle in government spending is only welfare improving under internal debt, and adds roughly the same volatility under external and internal debt.





Professor Zhigang Feng is an Associate Professor in Department of Economics at University of Nebraska-Omaha. His main research areas are quantitative macroeconomics, machine learning, public finance, labor economics and health economics. His research has been published in top economics journals such as International Studies of EconomicsJournal of Economic Behavior and Organization, Economic Theory and Macroeconomic Dynamics and so on. He obtained his Ph.D. in economics from University of Miami in 2009.