Browsing by Author "Lanteri, A"
Now showing 1 - 4 of 4
- Results Per Page
- Sort Options
Item Open Access Dynamics of Expenditures on Durable Goods: The Role of New-Product Quality(2021-06-01) Bertolotti, F; Gavazza, A; Lanteri, AItem Open Access Fiscal Policy with Limited-Time Commitment(Economic Research Initiatives at Duke (ERID), 2016-07-26) Clymo, A; Lanteri, AWe consider models where the Ramsey-optimal fiscal policy under Full Commitment (FC) is time-inconsistent and define a new notion of optimal policy, Limited-Time Commitment (LTC). Successive one-period lived governments can commit to future plans over a finite horizon. We provide a sufficient condition on the mapping from finite policy sequences to allocations, such that LTC and FC lead to the same outcomes. We then show that this condition is verified in several existing models, allowing FC Ramsey plans to be supported with a finite commitment horizon (often a single period). We relate the required degree of commitment to the economic environment: in economies without capital, the minimum degree of commitment required is given by the government debt maturity; in economies with capital and government balanced-budget constraints, the required commitment is given by the horizon over which the budget has to be balanced. Finally, we solve numerically for the LTC equilibrium of an economy where the equivalence result fails and show that a single year of commitment to capital taxes provides substantial welfare gains relative to the No-Commitment time-consistent policy.Item Open Access Optimal Policy with General Signal Extraction(Economic Research Initiatives at Duke (ERID), 2016-09-26) Hauk, E; Lanteri, A; Marcet, AThis paper studies optimal policy with partial information in a general setup where observed signals are endogenous to policy. In this case, signal extraction about the state of the economy cannot be separated from the determination of the optimal policy. We derive a non-standard first order condition of optimality from first principles and we use it to find numerical solutions. We show how previous results based on linear methods, where separation or certainty equivalence obtains, arise as special cases. We use as an example a model of fiscal policy and show that optimal taxes are often a very non-linear function of observed hours, calling for tax smoothing in normal times, but for a strong fiscal reaction to output when a recession is quite certain and the economy is near the top of the Laffer curve or near a debt limit.Item Open Access The Market for Used Capital: Endogenous Irreversibility and Reallocation Over the Business Cycle(Economic Research Initiatives at Duke (ERID), 2016-01-17) Lanteri, ACapital reallocation is procyclical in the data, but countercyclical in standard business-cycle models. To solve this puzzle, I build a model of endogenous partial irreversibility, with heterogeneous firms facing aggregate and idiosyncratic productivity shocks. Used investment goods are imperfect substitutes for new ones because of firm-level capital specificity. The price of used capital responds to aggregate shocks, leading to equilibrium real-option effects on investment and reallocation. The model generates procyclical capital reallocation and procyclical price of used capital, consistent with new industry-level evidence I present, and provides a microfoundation for both micro and macro capital adjustment costs.