Optimal Fiscal and Monetary Policy with Distorting Taxes
研究了当政府债务回报低于私人资产时，最优政策是否应扩大债务至回报相等。在完美预见模型中，仁慈政府会初始选择大回报差距和远期高扭曲税，但最优路径时间不一致且易被放弃。
When government debt pays a lower return than private assets, the reasoning in Friedman’s (1969) essay on the optimal quantity of money suggests that it would be optimal to expand the debt until its return matched that on private assets. When the only other source of revenue is a distorting tax, however, this is not generally true. In a perfect foresight model, a benevolent government that can make credible commitments chooses a large gap in returns initially and high distorting taxation in the distant future. The optimal path of taxation is time inconsistent, with ever-increasing temptation to abandon the path.