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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