On the effectiveness of automatic stabilizers under rational expectations when there is partial current information

Minford, A.P.L. and Peel, David (1983) On the effectiveness of automatic stabilizers under rational expectations when there is partial current information. Economics Letters, 11 (3). pp. 225-229. ISSN 0165-1765

Abstract

A number of papers have considered the impact of automatic stabilizers on the behaviour of real output in an economy. In this paper we consider the influence of tax stabilizers on output in amodelembodyinga Sargent-Wallace supply curve and an economy wide capitalmarket. We show that the impact of taxes on the variance of output is not independent of the degree of monetary noise.