Stabilizing endogenous fluctuations by fiscal policies; Global analysis on piecewise continuous dynamical systems
| Emanuelle Augeraud-Veron |
|
Laurent Augier |
| Université de La Rochelle |
|
Université de la Rochelle |
| Avenue Marillac |
|
Avenue Marillac |
| 17042 La Rochelle Cedex |
|
17042 La Rochelle Cedex 1 |
| France |
|
France |
Abstract:
This paper considers a one-sector OLG model with production. We observe that, under standart assumptions on preferences and technology, the perfect-foresight equilibrium violate positivity constraints for large sets of initial conditions. The consideration of the positivity constraints of the consumer enable to defined degenerate equilibrium, which are perfect-foresight equilibrium that remains on the trivial steady state from certain time. To correct this unsatisfactory situation, we introduce a mechanism redistributing resources among generations by levying taxes.
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