TITLE:
On Otaki’s Keynesian Macroeconomic Model
AUTHORS:
Masaoki Tamura
KEYWORDS:
Otaki Model, Imperfect Competition, OLG Model, Non-Neutrality of Money
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.1,
February
1,
2019
ABSTRACT: “Otaki model” is an overlapping generations (OLG)
model with fiat money and imperfect competition. It derives Keynesian
implications such as involuntary unemployment, welfare-improving fiscal and
monetary policy, and money non-neutrality. Though its structure can be applied
to other models with productive implications, the Otaki model has not been
fully understood by economists. One reason could be that in seminal works about
the Otaki model, he implicitly changed the hidden assumptions, and hence, the
implications of the model. By employing such assumptions, he aimed at dealing
with multiplicity of equilibria in the OLG model. This paper points out the
hidden assumptions and reinterprets the
Otaki model from the viewpoint of multiple equilibria.