Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/64166 
Year of Publication: 
2011
Series/Report no.: 
Working Paper No. 2011-25
Publisher: 
University of Massachusetts, Department of Economics, Amherst, MA
Abstract: 
Fiscal policy is needed to avoid dynamic inefficiency and maintain full employment in a modified Diamond OLG model with imperfect competition. A distributionally neutral tax scheme can maintain full employment in the face of variations in household confidence. No variations in taxes will be needed if households correctly anticipate future taxes: the tax policy functions as an insurance scheme.
Subjects: 
public debt
Keynesian OLG model
dynamic efficiency
confidence
JEL: 
E62
E22
Document Type: 
Working Paper

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