Balanced‐Budget Rules and Aggregate Instability: The Role of Endogenous Capital Utilization
研究了在封闭经济中，平衡预算财政政策如何通过内生资本利用率引发与基本面无关的总体不稳定，提醒政策制定者注意其可能成为自我实现预言和信念驱动波动的来源。
Abstract It has long been demonstrated that in a closed economy a balanced‐budget fiscal policy can induce aggregate instability unrelated to economic fundamentals. The empirical relevance of this result has been challenged by many studies. In this paper, we show that such extrinsic instability associated with a balanced‐budget rule is a robust phenomenon in a similar closed‐economy setting enhanced with endogenous capital utilization. This suggests that the design or operation of a balanced‐budget fiscal policy should recognize that it may constitute a potential source of self‐fulfilling prophecies and belief‐driven fluctuations.