@techreport{NBERw9132,
 title = "Optimal Long-Run Fiscal Policy: Constraints, Preferences and the Resolution of Uncertainty",
 author = "Alan J. Auerbach and Kevin A. Hassett",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "9132",
 year = "2002",
 month = "August",
 URL = "http://www.nber.org/papers/w9132",
 abstract = {We 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.},
}