This paper uses the Blanchard (1985) finite horizon model to study how taxes and government spending can be managed to stabilize aggregate demand. It is shown that tax policy cannot stabilize demand in less time than it stabilizes the public debt, but that, if government spending is the...

This paper uses the Blanchard (1985) finite horizon model to study how taxes and government spending can be managed to stabilize aggregate demand. It is shown that tax policy cannot stabilize demand in less time than it stabilizes the public debt, but that, if government spending is the...

This paper uses the Blanchard (1985) finite horizon model to study how taxes and government spending can be managed to stabilize aggregate demand. It is shown that tax policy cannot stabilize demand in less time than it stabilizes the public debt, but that, if government spending is the...