Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127066
Authors: 
Murota, Ryu-ichiro
Ono, Yoshiyasu
Year of Publication: 
2015
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 937
Abstract: 
We develop a Keynesian cross analysis with a dynamic optimization setting that explains long-run stagnation caused by aggregate demand deficiency. We show that an increase in government purchases boosts GDP through a multiplier process, but the implication is quite different from the conventional Keynesian one. It works not through an increase in disposable income but through moderation of deflation. Thus, countries that have lapsed into long-run stagnation should expand government spending that directly creates employment in order to reduce the deflationary gap.
Subjects: 
Aggregate Demand
Consumption Function
Keynesian Cross
Multiplier Effect
Persistent Unemployment
JEL: 
E12
E24
E62
Document Type: 
Working Paper

Files in This Item:
File
Size
164.32 kB





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