Optimal Fiscal Policy with Endogenous Product Variety
---- Acknowledgments ----
We thank Roc Armenter, Marco Bassetto, Susanto Basu, Florin Bilbiie, Jeffrey Campbell, Ippei Fujiwara, Andre Kurmann, Marc Melitz, and Henning Weber for helpful discussions, as well as participants in presentations at the Federal Reserve Bank of Boston, the Federal Reserve Bank of Chicago, Bilkent University, the IMF, the University of Zurich, the 2010 SED Annual Meeting, and the 2010 EEA Annual Conference. The views expressed in this paper are those of the authors and do not reflect those of the National Bureau of Economic Research, the Federal Reserve Bank of Boston, or Federal Reserve policy. Work on this paper was done while we held Visiting Scholar appointments at the Federal Reserve Bank of Boston, which we thank for hospitality and support. Ghironi also gratefully acknowledges support from the National Science Foundation through a grant to the NBER.