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Soon Ryoo, Peter Skott (2011) Public debt and full employment in a stockflow consistent model of a corporate economy, Department of Economics, University of Massachusetts Amherst, Working paper, n. 26


JEL classi?cation: E62, E22

Abstract: This paper examines the ?scal requirements for continuous full employment. We ?nd that (i) changes in the ?nancial behavior of households and ?rms require adjustments in tax rates and public debt, (ii) the stability of the steady-state solution for public debt depends on the ?scal instrument and the household consumption function, (iii) in stable cases, a fall in government consumption (or a decline in another component of autonomous demand) requires an increase in the steady-state ratio of public debt to
capital, and (iv) the steady-state tax rate may be positively or negatively related to the level of debt.

Keywords: corporate economy, full employment, public debt, Stock-flow Consistency

November 13, 2010 | Comments Closed