Hello everyone,
I would like to study a basic New-keynesian economy (Galí 2008/2015, chapter 3) with an additional fiscal block.
More specifically, the fiscal block should have the following properties:
- Taxes remain lump-sum
- Debt can be either real or nominal
- Government pursues a primary fiscal target as a % of GDP to pay interest on debt and expenses
- Debt/GDP is positive and stable in steady state
My goal is to calibrate the model using US data.
If possible, the model should not be log-linearized. Any suggestion on how to introduce this fiscal block? Any paper suggestion?
Thank very much in advance and would be great if someone could shed some light on this.