Skott, PeterRyoo, Soon2024-04-262024-04-26201510.7275/7565627https://hdl.handle.net/20.500.14394/22155This 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 debtKeynesian OLG modelsecular stagnationstructural liquidity trapdynamic efficiencyconfidenceEconomicsWorking Paper