2024-03-28T23:45:50Zhttps://escholarship.org/oaioai:escholarship.org:ark:/13030/qt1qk922742011-03-18T22:21:25Zqt1qk92274Optimal Long-Run Fiscal Policy: Constraints, Preferences and the Resolution of UncertaintyAuerbach, Alan J.Hassett, Kevin A.2002-08-01We construct a computational dynamic stochastic overlapping generations general equilibrium model with uncertain lifetimes and explore the impact of policy stickiness (specifically, a major reform will preclude future reforms for a generation) on optimal long-run fiscal policy. Under such circumstances, entitlement reforms exhaust a valuable option to move in the future. We explore the conditions under which the gain to waiting is large enough to induce optimizing policymakers to delay reforming a suboptimal system. We also allow for the uncertainty to have ARCH characteristics and explore the impact of time-varying uncertainty on the optimality of delayed policy action.application/pdfpubliceScholarship, University of Californiahttps://escholarship.org/uc/item/1qk92274publication