Optimal Policy in OG Models
AbstractIn the present paper general stationary overlapping generations economies with many commodities in every period and many different consumers in every generation are considered. A government maximizes an utilitarian social welfare function, that is the sum of weighted averages of utilities for generations, through fiscal policy, i.e. monetary transfers and taxes. Both situations with and without time discounting are considered. It is shown that if the discount factor is sufficiently close to one then the optimal policy stabilizes the economy, i.e. the equilibrium path has the turnpike property. Moreover the fiscal policy is shown to be time-consistent.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 90 (2000)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- Ghiglino, Christian & Tvede, Mich, 1998. "Optimal policy in OG models," Working Papers 08-1998, Copenhagen Business School, Department of Economics.
- Ghiglino, C. & Tvede, M., 1999. "Optimal Policy in OG Models," Papers 99-23, Carleton - School of Public Administration.
- Christian Ghiglino & Mich Tvede, 1999. "Optimal Policy in OG Models," Discussion Papers 99-23, University of Copenhagen. Department of Economics.
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
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