On the Dual Stability of a von Neumann Facet and the Inefficacy of Temporary Fiscal Policy
AbstractThis study establishes two main results in a dynamic general equilibrium model. The first is to demonstrate the dual Liapounov stability of a von Neumann facet without the restrictive assumptions on the structure of underlying technologies adopted commonly in the optimal growth literature. The second is to demonstrate that a temporary change in fiscal policy has almost no effect on present and future consumption. While such a result has been discussed in the context of permanent income hypothesis, in this study it is proved in the dynamic general equilibrium framework under a set of basic assumptions of general equilibrium theory.
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Bibliographic InfoArticle provided by Econometric Society in its journal Econometrica.
Volume (Year): 66 (1998)
Issue (Month): 2 (March)
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