Debt and Taxes in War and Peace: The Closed Economy Case

  • J. S. Flemming
Part of the International Economic Association Series book series (IEA)


This paper examines the role of budget deficits and surpluses in smoothing tax rates in stochastic world. A previous paper considered this problem in the case of an open economy in which factor prices were given by trade or capital mobility (Flemming, 1987). The earlier treatment is summarised in Section 2 below.


Public Good Labour Supply Public Expenditure Private Consumption Small Open Economy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Arrow, K. J. and Kurz, M. (1970) Public Investment, the Rate of Return and Optimal Fiscal Policy (Baltimore, MD: Johns Hopkins University Press).Google Scholar
  2. Barro, R. J. (1979) ‘On the Deterioration of the Public Debt’, Journal of Political Economy, vol. 87, pp. 940–71.CrossRefGoogle Scholar
  3. Currie, D. A. and Levine, P. (1985) ‘Credibility and Time Inconsistency in a Stochastic Model’. Queen Mary College, London, Research Paper, No. 36.Google Scholar
  4. Flemming, J. S. (1987) ‘Debt and Taxes in War and Peace: The Case of a Small Open Economy’ in Boskin, M. J., Flemming, J. S. and Gorini, S. (eds). Private Saving and Public Debt (Oxford: Blackwells).Google Scholar
  5. Hahn, F. H. (1973) ‘On Optimum Taxation’, Journal of Economic Theory, vol. 6, pp. 96–106.CrossRefGoogle Scholar
  6. Lucas, R. E. and Stokey, N. L. (1983) ‘Optimal Fiscal and Monetary Policy in an Economy without Capital’, Journal of Monetary Economics, vol. 12, pp. 55–94.CrossRefGoogle Scholar
  7. Mirrlees, J. A. (1971) ‘An exploration in the theory of optimum income taxation’, Review of Economic Studies, vol. 38. pp. 175–208.CrossRefGoogle Scholar
  8. Persson, T. and Svensson, L. E. O. (1984) ‘Time Consistent Fiscal Policy and Government Cash Flow’, Journal of Monetary Economics, vol. 14, no. 3, pp. 365–74.CrossRefGoogle Scholar
  9. Persson, T. and Svensson, L. E. O. (1985) ‘International Borrowing and Time Consistent Fiscal Policy’, Scandinavian Journal of Economics, vol. 14, pp. 365–74.Google Scholar

Copyright information

© International Economic Association 1988

Authors and Affiliations

  • J. S. Flemming
    • 1
  1. 1.Bank of EnglandUK

Personalised recommendations