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Social and Behavioral Sciences Commons™
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Articles 1 - 3 of 3
Full-Text Articles in Social and Behavioral Sciences
Functional Finance And Intergenerational Distribution In A Keynesian Olg Model, Peter Skott, Soon Ryoo
Functional Finance And Intergenerational Distribution In A Keynesian Olg Model, Peter Skott, Soon Ryoo
Economics Department Working Paper Series
This paper examines the role of fiscal policy in the long run. We show that (i) dynamic inefficiency in a standard OLG model generates aggregate demand problems in a Keynesian setting, (ii) fiscal policy can be used to achieve full-employment growth, (iii) the required debt ratio is inversely related to both the growth rate and government consumption, and (iv) a simple and distributionally neutral tax scheme can maintain full employment in the face of variations in ‘household confidence’
Public Debt, Secular Stagnation, And Functional Finance, Peter Skott
Public Debt, Secular Stagnation, And Functional Finance, Peter Skott
Economics Department Working Paper Series
Fiscal policy and public debt may be required to maintain full employment and avoid secular stagnation. This conclusion emerges from a range of different models, including OLG specifications and stock-flow consistent (post-) Keynesian models. One of the determinants of the required long-run debt ratio is the rate of economic growth. Low growth leads to high debt, and empirical correlations between growth and debt may reflect this causal effect of growth on debt, rather than negative effects of debt on growth. A second result relates directly to austerity policies. The level of government consumption and the structure of taxation influence the …
Fiscal And Monetary Policy Rules In An Unstable Economy, Soon Ryoo, Peter Skott
Fiscal And Monetary Policy Rules In An Unstable Economy, Soon Ryoo, Peter Skott
Economics Department Working Paper Series
This paper examines the implications of different monetary and fiscal policy rules in an economy characterized by Harrodian instability. We show that (i) a monetary rule along Taylor lines can be stabilizing for low debt ratios but becomes de-stabilizing if the debt ratio exceeds a certain threshold, (ii) a `Keynesian' fiscal policy rule can stabilize the economy at full employment, (iii) a fiscal `austerity' rule that links fiscal parameters to deviations from a target debt ratio fails to adjust the `warranted' to the `natural' growth rate and destabilizes the warranted path, (iv) instability may arise from a combination of fiscal …