Working Paper Number
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’
Skott, Peter and Ryoo, Soon, "Functional Finance and Intergenerational Distribution In a Keynesian OLG model" (2015). Economics Department Working Paper Series. 184.