The role of fiscal policy in an incomplete markets framework
Charles Thomas ()
No 451, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)
A general-equilibrium model is developed to highlight the link between neo-Keynesian models of unemployment and recent results on the constrained suboptimality of competitive economies with incomplete asset markets. Although the model deviates from the Arrow-Debreu paradigm only by the absence of some contingent claims, the competitive equilibrium exhibits underemployment and balanced-budget fiscal policies have Keynesian effects which are Pareto improving.
Keywords: Fiscal; policy (search for similar items in EconPapers)
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Journal Article: The Role of Fiscal Policy in an Incomplete Markets Framework (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:451
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