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

Soon Ryoo () and Peter Skott ()

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: 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

Keywords: Public debt; stock-flow consistency; corporate economy; full employment (search for similar items in EconPapers)
Date: 2011-10
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