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Welfare-Improving Debt Policy under Monopolistic Competition

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  • Partha Sen

Abstract

In this paper a model of monopolistic competition is used to show that debt-policy could be welfare-improving for all generations. Debt crowds out capital but that is welfare-improving because capital accumulation is immiserizing.

Suggested Citation

  • Partha Sen, "undated". "Welfare-Improving Debt Policy under Monopolistic Competition," EPRU Working Paper Series 94-07, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:epruwp:94-07
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    1. Andrew B. Abel & N. Gregory Mankiw & Lawrence H. Summers & Richard J. Zeckhauser, 1989. "Assessing Dynamic Efficiency: Theory and Evidence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(1), pages 1-19.
    2. Heijdra, Ben J, 1998. "Fiscal Policy Multipliers: The Role of Monopolistic Competition, Scale Economies, and Intertemporal Substitution in Labour Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 659-696, August.
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    8. Heijdra, Ben J & van der Ploeg, Frederick, 1996. "Keynesian Multipliers and the Cost of Public Funds under Monopolistic Competition," Economic Journal, Royal Economic Society, vol. 106(438), pages 1284-1296, September.
    9. Richard Startz, 1989. "Monopolistic Competition as a Foundation for Keynesian Macroeconomic Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(4), pages 737-752.
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    16. Nobuhiro Kiyotaki, 1988. "Multiple Expectational Equilibria Under Monopolistic Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(4), pages 695-713.
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    Cited by:

    1. Pierre Cahuc & Edouard Challe, 2012. "Produce Or Speculate? Asset Bubbles, Occupational Choice, And Efficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1105-1131, November.
    2. Partha Sen, 2009. "Fixed Costs, The Balanced Budget Multiplier And Welfare," The Japanese Economic Review, Japanese Economic Association, vol. 60(3), pages 395-404, September.
    3. Takayuki Ogawa, 2004. "Welfare Analysis of Debt Policy during Recessions," Discussion Papers in Economics and Business 04-14, Osaka University, Graduate School of Economics.
    4. Takayuki Ogawa, 2005. "Welfare Analysis of Debt Policy during Recessions," ISER Discussion Paper 0642, Institute of Social and Economic Research, Osaka University.
    5. Tanaka Yasuhito, 2020. "A Keynesian Approach to Fiscal Policy for Full Employment and Continuous Time Debt Dynamics," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 65(1), pages 20-38, April.
    6. Oz Shy & Rune Stenbacka, 2019. "Bank competition, real investments, and welfare," Journal of Economics, Springer, vol. 127(1), pages 73-90, June.

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