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

  • Soon Ryoo

    ()

    (Adelphi University)

  • Peter Skott

    ()

    (University of Massachusetts Amherst)

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-state 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-state ratio of public debt to capital, and (iv) the steady-state tax rate may be positively or negatively related to the level of debt. JEL Categories: E62, E22

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File URL: http://www.umass.edu/economics/publications/2011-26.pdf
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Paper provided by University of Massachusetts Amherst, Department of Economics in its series UMASS Amherst Economics Working Papers with number 2011-26.

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Date of creation: Oct 2011
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Handle: RePEc:ums:papers:2011-26
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  1. Nakatani, Takeshi & Skott, Peter, 2007. "Japanese growth and stagnation: A Keynesian perspective," Structural Change and Economic Dynamics, Elsevier, vol. 18(3), pages 306-332, September.
  2. Jan Kregel, 2010. "Fiscal Responsibility: What Exactly Does It Mean?," Economics Working Paper Archive wp_602, Levy Economics Institute.
  3. 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.
  4. Peter Skott & Soon Ryoo, 2007. "Macroeconomic implications of financialization," UMASS Amherst Economics Working Papers 2007-08, University of Massachusetts Amherst, Department of Economics.
  5. 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.
  6. Peter Skott, 2012. "Theoretical And Empirical Shortcomings Of The Kaleckian Investment Function," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 109-138, 02.
  7. 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.
  8. Peter Skott, 2011. "Increasing inequality and financial instability," UMASS Amherst Economics Working Papers 2011-20, University of Massachusetts Amherst, Department of Economics.
  9. Ekkehart Schlicht, 2006. "Public Debt As Private Wealth: Some Equilibrium Considerations," Metroeconomica, Wiley Blackwell, vol. 57(4), pages 494-520, November.
  10. Peter Skott & Ben Zipperer, 2012. "An empirical evaluation of three post-Keynesian models," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 9(2), pages 277-307.
  11. 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.
  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. Ryoo, Soon, 2010. "Long waves and short cycles in a model of endogenous financial fragility," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 163-186, June.
  14. Schlicht, Ekkehart, 2008. "Public Debt as Private Wealth," Munich Reprints in Economics 2143, University of Munich, Department of Economics.
  15. 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.
  16. repec:cup:cbooks:9780521066310 is not listed on IDEAS
  17. Peter Skott, . "Demand Policy in the Long Run," Economics Working Papers 2000-17, School of Economics and Management, University of Aarhus.
  18. Stephen Cecchetti & Madhusudan Mohanty & Fabrizio Zampolli, 2010. "The future of public debt: prospects and implications," BIS Working Papers 300, Bank for International Settlements.
  19. 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.
  20. 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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