||Two Time Lags in the Public Sector:Macroeconomic Stability and Complexd Behaviors
This study develops a macroeconomic model that considers two time lags in the public sector――a government expenditure lag and a tax collection lag――and examines the effects of these lags on local stability of the steady state. According to previous studies, a sufficiently large expenditure lag causes economic instability. However, we show that a tax collection lag can have a stabilizing effect on the steady state. In addition, we develop an analysis of global dynamics to demonstrate that an increase in a tax collection lag can yield complex behaviors.