Document details

Essay on secular stagnation

Author(s): Lancastre, Manuel Corrêa de Barros de

Date: 2015

Persistent ID:

Origin: Repositório Institucional da UNL

Subject(s): Secular stagnation; Liquidity trap; Distortionary taxes


In this paper we show that a closed economy, with a balanced budget and unable to increase public spending, can avoid or leave a persistent slump through adequate and timely combination of monetary and fiscal policy based on distortionary taxation. We use a three generations OLG New Keynesian model in which a permanent slump is possible without any self-correcting force to full-employment. Complementing recent work on Secular Stagnation using lump-sum taxation and government spending as fiscal instruments, our contribution is to use distortionary taxes over labor, consumption and capital, in a balanced budget environment with constant (or decreasing) government spending.

Document Type Master thesis
Language English
Advisor(s) Franco, Francesco
Contributor(s) Lancastre, Manuel Corrêa de Barros de
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