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The Intergenerational Incidence of Government Spending

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  • KIM‐HENG TAN

Abstract

This paper analyzes the effect of an increase in government spending on the welfare of different generations in a dynamic general equilibrium model. The paper shows that the intergenerational incidence of government spending on a public good is determined not only by the welfare effects due to the public good and to financing the good but also by a welfare effect due to intertemporal substitution between private consumption when government spending is increased. The degree of substitutability between private consumption and public spending is shown to be a key determinant of this incidence.

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  • Kim‐Heng Tan, 1995. "The Intergenerational Incidence of Government Spending," The Economic Record, The Economic Society of Australia, vol. 71(1), pages 54-65, March.
    • Handle: RePEc:bla:ecorec:v:71:y:1995:i:1:p:54-65
    DOI: 10.1111/j.1475-4932.1995.tb01871.x
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