Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105762
Authors: 
Skott, Peter
Ryoo, Soon
Year of Publication: 
2012
Series/Report no.: 
Working Paper, University of Massachusetts, Department of Economics 2012-10
Abstract: 
This paper examines the role of fiscal policy in the long run. We show that (i) dynamic inefficiency may be empirically relevant in a modified Diamond OLG model with imperfect competition, (ii) fiscal policy may be needed to avoid inefficiency (if investment adjusts passively to saving) and maintain full employment (if investment and saving decisions are taken separately), (iii) a simple and distributionally neutral tax scheme can maintain full employment in the face of variations in 'household confidence', and (iv) the debt ratio is inversely related to both the growth rate and government consumption. JEL Categories: E62, E22
Subjects: 
Public debt
Keynesian OLG model
dynamic efficiency
confidence
sustainability
JEL: 
E62
E22
Document Type: 
Working Paper

Files in This Item:
File
Size
415.15 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.