Econometrica Vol. 66 No. 2 1998
On the Dual Stability of a Von Neumann Facet and the Inefficacy of Temporary Fiscal Policy
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.
- DOI
- 10.2307/2998565
- Volume
- 66
- Issue
- 2
- Pages
- 427
- Sources
- bibtex:phds-export.bib crossref openalex