College of the Holy Cross

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  • Optimal Fiscal Policy with Robust Control

    White Papers // Oct 2010 // provided by College of the Holy Cross

    This paper compares the fiscal policies implemented by two types of government when confronted by consumer uncertainty. Consumers, lacking confidence in their knowledge of the stochastic environment, endogenously tilt their subjective probability model away from an approximating probability model. The government does not face this uncertainty. Through its choice of ...

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