Fiscal Stimulus of Last Resort

I examine global dynamics in a monetary model with overlapping generations of finite-horizon agents and binding lower bound on nominal interest rates. Debt targeting rules exacerbate the possibility self-fulfilling liquidity traps, for expect austerity following deflationary slumps. Conversely, activist but sustainable fiscal policy regimes - implementing intertemporally balanced tax cuts and/or transfer increases response to disinflationary trajectories are capable escaping traps embarking inflation into globally stable path that converges target. Should stimulus last resort be overly aggressive, however, spiral around liquidity-trap steady state exist, causing indeterminacy.