On the Dual Stability of a von Neumann Facet and the Inefficacy of Temporary Fiscal Policy

Makoto Yano

Econometrica, 1998, vol. 66, issue 2, 427-452

Abstract: This study establishes two main results in a dynamic general equilibrium model. The first is to demonstrate the dual Liapounov stability of a von Neumann facet without the restrictive assumptions on the structure of underlying technologies adopted commonly in the optimal growth literature. The second is to demonstrate that a temporary change in fiscal policy has almost no effect on present and future consumption. While such a result has been discussed in the context of permanent income hypothesis, in this study it is proved in the dynamic general equilibrium framework under a set of basic assumptions of general equilibrium theory.

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:ecm:emetrp:v:66:y:1998:i:2:p:427-452

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