Imperfect competition in an overlapping generations model: a case for fiscal policy
AbstractImperfect competition is a meaningful feature for macroeconomic analysis only to the extent that it leads to properties qualitatively different from those obtained under perfect competition. In particular, we have to wonder how imperfect competition per se may found an effective fiscal policy. For that matter we consider a simple overlapping generations model with firms acting as Cournot oligopolists in the good market. Through fiscal policy, a government, keeping the stock of money constant, redistributes wealth among generations and absorbs some of the output to provide public services. We show in this model that fiscal policy, by affecting firms' market power, can move the economy across perfect foresight stationary equilibria along a Pareto improving path, or that it can implement a full employment stationary equilibrium which Pareto-dominates underemployment equilibria.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -1144.
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Note: In : Annales d'économie et de statistique, 37/38, 531-555, 1995
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- Claude d'ASPREMONT & Rodolphe DOS SANTOS FERREIRA & Louis-AndrÃ© GERARD-VARET, 1995. "Imperfect Competition in an Overlapping Generations Model: A Case for Fiscal Policy," Annales d'Economie et de Statistique, ENSAE, issue 37-38, pages 531-555.
- d ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe & GERARD-VARET, Louis-AndrÃ©, 1994. "Imperfect Competition in an Overlapping Generations Model : A Case for Fiscal Policy," CORE Discussion Papers, UniversitÃ© catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1994077, UniversitÃ© catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- Costa, LuÃs F. & Dixon, Huw David, 2011. "Fiscal policy under imperfect competition with flexible prices: An overview and survey," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 5(3), pages 1-57.
- Peter Skott & Soon Ryoo, 2012. "Public Debt and Functional Finance in an OLG Model with Imperfect Competition," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2012-10, University of Massachusetts Amherst, Department of Economics.
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