Future Fiscal and Budgetary Shocks

• Main Authors: HOON, Hian Teck, Phelps, Edmund S.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2008
• Subjects: Future shocks; Business assets; Employment.; Econometrics; Finance
• Online Access: https://ink.library.smu.edu.sg/soe_research/73; https://ink.library.smu.edu.sg/context/soe_research/article/1072/viewcontent/FutureFiscal.pdf
• Institution: Singapore Management University

We study the effects of future tax and budgetary shocks in a non-monetary and possibly non-Ricardian economy. An (unanticipated) temporary labor tax cut to be effective on a given future date—a delayed “debt bomb”—causes at once a drop in the (unit) value placed on the firms' business asset, th...