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dc.contributor.author Rahman, M Saifur
dc.date.accessioned 2008-09-19T20:26:05Z
dc.date.available 2008-09-19T20:26:05Z
dc.date.issued 2008-09-19
dc.identifier.uri http://ssrn.com/abstract=1270634 en
dc.identifier.uri http://www.iub.edu/~caepr/RePEc/PDF/2008/CAEPR2008-023.pdf en
dc.identifier.uri http://hdl.handle.net/2022/3198
dc.description.abstract Traditionally, Dynamic Scoring calculations experiments are carried out using representative agent based macroeconomic models. Existing literature does not provide any objection to this approach. In this paper, I develop a heterogeneous agent model similar to the Saver-Spenders model of Mankiw (2000). But spenders in my model are merely credit constrained and not rule-of-thumb consumers. Both groups are intertemporal optimizers because of the existence of Internal Habit Persistence. Transition path of most of the macro and fiscal variables for various tax cuts under alternative financing scheme shows pattern which are significantly different and sometimes contrasting to the representative agent model. Dynamic scoring calculations reveal a downward bias of the representative agent model. Underestimation of the dynamic response could be as large as 45%. Finally, steady state results indicate smaller impact of contractionary policies on major fiscal variables such as net tax revenue and tax base. Over all, the paper argues that the need to use heterogeneous agent based model in dynamic fiscal calculations is not only desirable, but also essential. en
dc.format.extent 750882 bytes
dc.format.mimetype application/pdf
dc.language.iso en_US en
dc.publisher Center for Applied Economics and Policy Research en
dc.relation.ispartofseries CAEPR Working Papers en
dc.relation.ispartofseries 2008-023 en
dc.relation.isversionof This paper is also available on SSRN and RePEc. en
dc.subject CAEPR en
dc.subject Center for Applied Economics and Policy Research en
dc.subject Savers-spenders model en
dc.subject rule-of thumb consumer en
dc.subject intertemporal optimizers en
dc.subject dynamic scoring en
dc.subject habit persistence en
dc.subject alternative financing en
dc.subject debt financing en
dc.subject fiscal policy en
dc.title Should Dynamic Scoring be done with Heterogeneous Agent-Based Models? Challenging the Conventional Wisdom en
dc.type Working Paper en


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