Some recent contributions to Economic Dynamics have shown an increasing interest on the impact that fiscal policy lags may have on the income adjustment processes. Lags dealing with fiscal policy come from delays either in the government expenditure or in the tax revenues. These two lags yield jointly their macroeconomic effects. They are such that to make traditional fiscal policy rules ineffectual to control, and stabilize the GDP dynamics. Here we study a dynamic IS–LM model where the public expenditure and the tax revenues have a delayed functional form. We show that the equilibrium of the system may lose or gain its local stability depending either on the length of the lags or on their particular combinations. When instability arises, very complicated dynamics may characterize the national income time path.

This paper investigates an open economy dynamic model in the Harrod tradition. Its goal is to check if in accordance with Harrod’s thought, opening to foreign trade is able to reduce the cyclical instability the economic system exhibits when it is closed to the international trade. We show that the system’s dynamic behavior depends on changes in the saving rate, the competitiveness of home products in the foreign markets and the initial sign of the balance of trade. We demonstrate that stable cycles are possible only under particular conditions. Otherwise, the economy may experience chaotic motions in the long period.

In this paper, we investigate the impact of delayed tax revenues on the outcomes of fiscal policy. The analytical framework is the Goodwin growth cycle model, which is founded on the Volterra predator-prey equations. We study the dynamic behavior of the system ana- lytically proving the existence of Hopf bifurcations, which may be supercritical and sub- critical. In the numerical simulations, which follows the qualitative analysis, it is shown that, given the degree of competition in the markets, fiscal policy purposes may become consistent with their real outcomes only if policy makers are able to control the delay in the structure of the tax system. Nevertheless, there are in the system elements out of the control of the policy makers. These elements imply the possibility to make partially ineffectual the stabilization policy, because of the risk to overcome the minimum public expenditure able to stabilize the system.

The interest in the impact of fiscal policy lags on economic stability increased in the last decade. Several studies have been made on delays either in the government expenditure or in the tax system, where lags exist between the accrual and the payment of taxes. Nevertheless there is in the literature no model where time delays in government expenditures and in tax revenues are considered together as it happens in the real world. In this paper we remedied this defect and proposed a macro-dynamic model where two delays appear: the first pertains to the public expenditure, the second, to the tax revenue. The resulting system of delayed differential equations is studied qualitatively and numerically. The analysis suggests that only particular combinations of the two delays make the system stable. Prevalently the system is unstable and chaotic motions may arise. This implies that the economy may need appropriate structural changes in the public sector to improve fiscal policy outcomes in such a way they may really be consistent with their stabilization purposes.