Davide Debortoli

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Due to time-inconsistency or political turnover, policymakers’ promises are not always fulfilled. We analyze an optimal fiscal policy problem where the plans made by the benevolent government are periodically revised. In this loose commitment setting, the properties of labor and capital income taxes are significantly different than under the full-commitment(More)
The tendency of countries to accumulate public debt has been rationalized in models of political disagreement and lack of commitment. We analyze in a benchmark model how the evolution of public debt is affected by lack of commitment per se. While commitment introduces indeterminacy in the level of debt, lack of commitment creates incentives for debt to(More)
  • José Dorich, Jason Allen, +19 authors Alexander Ueberfeldt
  • 2007
This paper presents a structural econometric analysis that suggests that money still plays an independent role in the monetary transmission mechanism in the United States. In particular, it indicates that real money balance effects are quantitatively important but smaller than they used to be in the early postwar period. Therefore, the specification of(More)
We prove the generality of the methodology proposed in Benigno and Woodford (2006). We show that, even in the presence of a distorted steady state, it is always possible and relatively simple to obtain a purely quadratic approximation to the welfare measure. We also show that, in order to do so, the timeless perspective assumption is crucial. JEL(More)
I build a dynamic stochastic general equilibrium model with search and matching frictions and two sectors in order to study the labour market effects of public sector employment and wages. Public sector wages plays an important role in achieving the efficient allocation. High wages induce too many unemployed to queue for public sector jobs, while if they(More)
We analyze how public debt evolves when successive policymakers have different policy goals and cannot make credible commitments about their future policies. We consider several cases to be able to quantify the effects of imperfect commitment, political disagreement and political turnover. Imperfect commitment drives the long-run level of debt to zero. With(More)
Capital reallocation is strongly procyclical in the data, but in standard business-cycle models with heterogeneous firms it is countercyclical. In this paper I argue that endogenizing the price of used capital solves this puzzle. First, I show empirically that for several sectors the price of used investment goods relative to new is procyclical. Second, I(More)
Monetary policy objectives and targets are not necessarily constant over time. The regime-switching literature has typically analyzed and interpreted changes in policymakers’ behavior through simple interest rate rules. This paper analyzes policy regime-switches by explicitly modeling policymakers’ behavior and objectives. We show that changes in the(More)