Consider the effect of a tax cut (if government spending remains the same) in a country with

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Consider the effect of a tax cut (if government spending remains the same) in a country with an underdeveloped financial system.

a) Assuming individuals are forward looking (i.e., the Ricardian equivalence argument holds), what do you think might happen to national saving in this case?

b) How do you think forward looking individuals might overcome the limitations of an underdeveloped financial system?

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Macroeconomics Policy And Practice

ISBN: 9781137393951

1st Edition

Authors: Frederic S. Mishkin

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Question Posted: Nov 11, 2024 06:00 AM

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Consider the effect of a tax cut (if government spending remains the same) in a country with

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Macroeconomics Policy And Practice

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