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Public debt and full employment in a stock-flow consistent model of a corporate economy

  • Soon Ryoo
  • Peter Skott

This paper examines the fiscal requirements for continuous full employment. We find that (i) changes in the financial behavior of households and firms require adjustments in tax rates and public debt, (ii) the stability of the steady-growth solution for public debt depends on the fiscal instrument and the household consumption function, (iii) in stable cases, a fall in government consumption (or a decline in another component of autonomous demand) requires an increase in the steady-growth ratio of public debt to capital, and (iv) the steady-growth tax rate may be positively or negatively related to the level of debt.

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Article provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.

Volume (Year): 35 (2013)
Issue (Month): 4 (July)
Pages: 511-528

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Handle: RePEc:mes:postke:v:35:y:2013:i:4:p:511-528
Contact details of provider: Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348

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  1. Peter Skott, 2011. "Increasing inequality and financial instability," UMASS Amherst Economics Working Papers 2011-20, University of Massachusetts Amherst, Department of Economics.
  2. Peter Skott, 2012. "Theoretical And Empirical Shortcomings Of The Kaleckian Investment Function," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 109-138, 02.
  3. Peter Skott, Ben Zipperer, 2010. "An empirical evaluation of three post Keynesian models," UMASS Amherst Economics Working Papers 2010-08, University of Massachusetts Amherst, Department of Economics.
  4. Yeva Nersisyan & L. Randall Wray, 2010. "Deficit Hysteria Redux? Why We Should Stop Worrying About U.S. Government Deficits," Economics Public Policy Brief Archive ppb_111, Levy Economics Institute.
  5. repec:cup:cbooks:9780521066310 is not listed on IDEAS
  6. Schlicht, Ekkehart, 2004. "Public Debt as Private Wealth," Discussion Papers in Economics 371, University of Munich, Department of Economics.
  7. Jan Kregel, 2010. "Fiscal Responsibility: What Exactly Does It Mean?," Economics Working Paper Archive wp_602, Levy Economics Institute.
  8. Peter Skott & Soon Ryoo, 2008. "Macroeconomic implications of financialisation," Cambridge Journal of Economics, Oxford University Press, vol. 32(6), pages 827-862, November.
  9. Philip Arestis & Malcolm Sawyer, 2010. "The return of fiscal policy," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 32(3), pages 327-346, April.
  10. Peter Skott & Takeshi Nakatani, 2006. "Japanese growth and stagnation: a Keynesian perspective," UMASS Amherst Economics Working Papers 2006-04, University of Massachusetts Amherst, Department of Economics.
  11. Asada, Toichiro & Chiarella, Carl & Flaschel, Peter & Mouakil, Tarik & Proaño, Christian R., 2009. "Stabilizing an unstable economy: on the choice of proper policy measures," Economics Discussion Papers 2009-50, Kiel Institute for the World Economy.
  12. Eckhard Hein & Marc Lavoie & Till van Treeck, 2012. "Harrodian Instability And The ‘Normal Rate’ Of Capacity Utilization In Kaleckian Models Of Distribution And Growth—A Survey," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 139-169, 02.
  13. Peter Skott, . "Demand Policy in the Long Run," Economics Working Papers 2000-17, School of Economics and Management, University of Aarhus.
  14. Soon Ryoo, 2009. "Long waves and short cycles in a model of endogenous financial fragility," UMASS Amherst Economics Working Papers 2009-03, University of Massachusetts Amherst, Department of Economics.
  15. Stephen Cecchetti & Madhusudan Mohanty & Fabrizio Zampolli, 2010. "The future of public debt: prospects and implications," BIS Working Papers 300, Bank for International Settlements.
  16. Thomas I. Palley, 2010. "The Simple Macroeconomics of Fiscal Austerity, Public Sector Debt and Deflation," IMK Working Paper 8-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  17. Peter Skott & Soon Ryoo, 2011. "Public debt in an OLG model with imperfect competition," UMASS Amherst Economics Working Papers 2011-25, University of Massachusetts Amherst, Department of Economics.
  18. Wynne Goldey & Marc Lavoie, 2007. "Fiscal policy in a stock-flow consistent (SFC) model," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 30(1), pages 79-100, October.
  19. Paul Davidson, 2010. "Making dollars and sense of the U.S. government debt," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 32(4), pages 661-666, July.
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