01671cas a2200253 a 4500 AALejournalIMF007590 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451921151 1018-5941 BD-DhAAL BD-DhAAL Chari, V. Sustainable Plans and Mutual Default / V. Chari, Patrick Kehoe. Washington, D.C. : International Monetary Fund, 1990. 1 online resource (38 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper presents a model of optimal taxation in which both private agents and the government can default on their debt. We first consider Ramsey equilibria in which the government can precommit to its policies but in which private agents can default. We then consider sustainable equilibria in which both government and private agent decision rules are required to be sequentially rational. We show that when there is sufficiently little discounting and government consumption fluctuates enough, the Ramsey allocations and policies (in which the government never defaults) can be supported by a sustainable equilibrium. Mode of access: Internet Kehoe, Patrick. IMF Working Papers; Working Paper ; No. 1990/022 Full text available on IMF http://elibrary.imf.org/view/journals/001/1990/022/001.1990.issue-022-en.xml IMF e-Library