The Econometric Society An International Society for the Advancement of Economic Theory in its Relation to Statistics and Mathematics
Home Contacts
Econometrica

New Journals

Econometrica
Editorial Board
Journal News

Monograph Series

November 1984 - Volume 52 Issue 6 Page 1437 - 1452


p.1437


Dynamic Inconsistency, Rational Expectations, and Optimal Government Policy

Brian Hillier
James M. Malcomson

Abstract

The consensus in the literature is that the use of only lump-sum taxation is a necessary and sufficient condition for the dynamic consistency of optimal open-loop government policies. We show that this does not hold for models with nonhomogeneous agents. Then the stated condition is neither necessary nor sufficient. Dynamic inconsistency arises because of a shortage of appropriate government policy instruments which amounts to the consensus condition only in special cases.

Full content Login                                    

Note: to view the fulltext of the article, please login first and then click the "full content" button. If you are based at a subscribing Institution or Library or if you have a separate access to JSTOR/Wiley Online Library please click on the "Institutional access" button.
Prev | All Articles | Next
Go to top
Membership



Email me my password
Join/Renew
Change your address
Register for password
Require login:
Amend your profile
E-mail Alerting
The Society
About the Society
Society News
Society Reports
Officers
Fellows
Members
Regions
Meetings
Future Meetings
Past Meetings
Meeting Announcements
Google
web this site
   
Wiley-Blackwell
Site created and maintained by Wiley-Blackwell.
Comments? Contact customsiteshelp@wiley.com
To view our Privacy Policy, please click here.