Working Paper Number
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.
Skott, Peter and Ryoo, Soon, "Public debt in an OLG model with imperfect competition" (2011). Economics Department Working Paper Series. 133.