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Essay on secular stagnation
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Orientador(es)
Resumo(s)
In this paper we show that a closed economy, with a balanced budget and unable to increase public spending, can avoid or leave a persistent slump through adequate and
timely combination of monetary and fiscal policy based on distortionary taxation. We
use a three generations OLG New Keynesian model in which a permanent slump is
possible without any self-correcting force to full-employment. Complementing recent
work on Secular Stagnation using lump-sum taxation and government spending as
fiscal instruments, our contribution is to use distortionary taxes over labor, consumption and capital, in a balanced budget environment with constant (or decreasing) government spending.
Descrição
Palavras-chave
Secular stagnation Liquidity trap Distortionary taxes