Public Debt As Private Wealth: Some Equilibrium Considerations
AbstractGovernment bonds are interest-bearing assets. Increasing public debt increases wealth, income and consumption demand. The smaller government expenditure is, the larger consumption demand must be in equilibrium, and the larger must be public debt. Conversely, lower public debt implies higher government spending and taxation. Public debt plays, thus, an important role in establishing equilibrium. It distributes output between consumers and government. In case of insufficient demand, a larger public debt entails higher private consumption and less public spending. If upper bounds on public debt are introduced (as in the Maastricht treaty), such constraints place lower bounds on taxation and public spending and may rule out macroeconomic equilibrium. As an aside, a minor flaw in Domar's (American Economic Review, 34 (4), pp. 798-827) classical analysis is corrected. Copyright � 2006 The Author; Journal compilation � 2006 Blackwell Publishing Ltd.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal Metroeconomica.
Volume (Year): 57 (2006)
Issue (Month): 4 (November)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0026-1386
Other versions of this item:
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H6 - Public Economics - - National Budget, Deficit, and Debt
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barro, Robert J, 1989.
"The Ricardian Approach to Budget Deficits,"
Journal of Economic Perspectives,
American Economic Association, vol. 3(2), pages 37-54, Spring.
- Robert J. Barro, 1988. "The Ricardian Approach to Budget Deficits," NBER Working Papers 2685, National Bureau of Economic Research, Inc.
- Robert J. Barro, 1988. "The Ricardian Approach to Budget Deficits," Working Papers, Queen's University, Department of Economics 728, Queen's University, Department of Economics.
- Barro, Robert J., 1979.
"On the Determination of the Public Debt,"
3451400, Harvard University Department of Economics.
- Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(5), pages 940-71, October.
- James M. Poterba, 2000. "Stock Market Wealth and Consumption," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 99-118, Spring.
- Robert-Paul Berben & Teunis Brosens, 2005. "The Impact of Government Debt on Private Consumption in OECD Countries," DNB Working Papers, Netherlands Central Bank, Research Department 045, Netherlands Central Bank, Research Department.
- Barro, Robert J, 1974.
"Are Government Bonds Net Wealth?,"
Journal of Political Economy, University of Chicago Press,
University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
- Sayer, Stuart, 1989. " Macroeconomic Theory and Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 3(4), pages 353-74.
- Soon Ryoo & Peter Skott, 2013.
"Public debt and full employment in a stock-flow consistent model of a corporate economy,"
Journal of Post Keynesian Economics,
M.E. Sharpe, Inc., vol. 35(4), pages 511-528, July.
- Peter Skott & Soon Ryoo, 2011. "Public debt in an OLG model with imperfect competition," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2011-25, .
- Schlicht, Ekkehart, 2013.
"Unexpected Consequences of Ricardian Expectations,"
Discussion Papers in Economics
14847, University of Munich, Department of Economics.
- Nakatani, Takeshi & Skott, Peter, 2007.
"Japanese growth and stagnation: A Keynesian perspective,"
Structural Change and Economic Dynamics, Elsevier,
Elsevier, vol. 18(3), pages 306-332, September.
- Peter Skott & Takeshi Nakatani, 2006. "Japanese growth and stagnation: a Keynesian perspective," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2006-04, .
- Peter Skott & Soon Ryoo, 2013.
"Public debt in an OLG model with imperfect competition: long-run effects of austerity programs and changes in the growth rate,"
UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics
- Skott Peter & Ryoo Soon, 2014. "Public debt in an OLG model with imperfect competition: long-run effects of austerity programs and changes in the growth rate," The B.E. Journal of Macroeconomics, De Gruyter, De Gruyter, vol. 14(1), pages 20, January.
- Schlicht, Ekkehart, 2012.
"A case where Barro expectations are not rational,"
Economics Discussion Papers
2012-13, Kiel Institute for the World Economy.
- Muriel Pucci & Bruno Tinel, 2010. "RÃ©ductions d'impÃ´ts et dette publique : un lien Ã ne pas occulter," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00488760, HAL.
- Peter Skott & Soon Ryoo, 2012. "Public Debt and Functional Finance in an OLG Model with Imperfect Competition," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2012-10, .
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.