Imperfect Competition in an Overlapping Generations Model: A Case for Fiscal Policy

Claude d ASPREMONT (), Rodolphe Dos Santos Ferreira and Louis-André Gérard-Varet
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Claude d ASPREMONT: CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium
Authors registered in the RePEc Author Service: Claude d'Aspremont

No 1994077, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Imperfect competition is a meaningful feature for macroeconomic analysis only to the extent that is leads to properties qualitatively different from those obtained under perfect competition. In particular, we have to wonder how imperfect competition per se may find an alternative fiscal policy. For that matter we consider a simple overlapping generations model with firms acting as Cournot oligopolists in the good market. Through fiscal policy, a government, keeping the stock of money constant, retributes wealth amoung generations and absorb some of the output to provide public services. We show in this model that fiscal policy, by affecting firms’market power, can move the economy across perfect foresight stationary equilibria along a Pareto improving path, or that it can implement a full employment stationary equilibrium which Pareto-dominates underemployment equilibria

Date: 1994-12-01
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Related works:
Journal Article: Imperfect Competition in an Overlapping Generations Model: A Case for Fiscal Policy (1995)
Working Paper: Imperfect competition in an overlapping generations model: a case for fiscal policy (1995)
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