Debt, deficits and finite horizons

Description

"We introduce a solution technique for the study of discrete time stochastic models populated by long-lived agents. We introduce aggregate uncertainty and complete markets into a 'perpetual-youth' model of a kind first studied by Olivier Blanchard and we show that the pure-trade version of the model behaves much like the two-period overlapping generations model. Our methods are easily generalized to economies with production and they should prove useful to researchers who seek a tractable stochastic model in which fiscal policy has real effects on aggregate allocations"--National Bureau of Economic Research web site.

Subjects

Series Statement

• NBER working paper series -- working paper 15025
• Working paper series (National Bureau of Economic Research : Online) -- working paper no. 15025.

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