Optimal Taxation with Endogenous Default under Incomplete Markets
研究了政府可以违约时，最优税收和债务政策如何受影响，发现违约能减少未来税收扭曲，但违约风险会限制政府平滑税收的能力。
How are the optimal tax and debt policies affected if the government can default on its debt? We address this question from a normative perspective in an economy with noncontingent government debt, domestic default, and labor taxes. On one hand, default prevents the government from incurring future tax distortions associated with servicing the debt. On the other hand, default risk gives rise to endogenous credit limits that hinder the government's ability to smooth taxes. We characterize the fiscal policy and show how the option to default alters the near–unit root component of taxes in the economy with risk-free borrowing.