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Distorted prices and targeted taxes in the New Keynesian Network model

Anastasiia Antonova & Gernot J. Müller

Journal of Monetary Economics2026https://doi.org/10.1016/j.jmoneco.2026.103904article
AJG 4ABDC A*
Weight
0.50

What the paper says

When confronted with sectoral shocks, policymakers often resort to targeted, sector-specific taxes in an ad hoc fashion. Based on the New Keynesian Network model, we characterize the optimal tax response to sectoral shocks: it features twice as many tax instruments as there are sectors, is budget-neutral, and not confined to the sector where the shock originates. We show that the optimal policy can be approximated by a simple rule that responds to inflation in the shocked sector and adjusts tax instruments in other sectors according to input–output linkages. We study its quantitative performance in a calibrated version of the model. • The paper analyzes the optimal tax response to sectoral shocks. • The policy is budget-neutral and requires twice as many instruments as sectors. • A simple, implementable rule provides a close approximation to the optimal policy.

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https://doi.org/https://doi.org/10.1016/j.jmoneco.2026.103904

Or copy a formatted citation

@article{anastasiia2026,
  title        = {{Distorted prices and targeted taxes in the New Keynesian Network model}},
  author       = {Anastasiia Antonova & Gernot J. Müller},
  journal      = {Journal of Monetary Economics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jmoneco.2026.103904},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.