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Sustainability Of Public Debt And Inequality In A General Equilibrium Model

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  • Maebayashi, Noritaka
  • Konishi, Kunihiko

Abstract

This study investigates the relationship between the sustainability of public debt and inequality in an endogenous growth model with heterogeneous agents. We show that the threshold for the sustainability of public debt is related to not only the relative size of public debt but also inequality. In addition, this study examines the effects of budget deficit and redistributive policies on the sustainability of public debt and inequality. We show that an increase in the deficit ratio or the redistributive tax makes public debt less sustainable. If the economy falls into the unsustainable region as a result of the policy change, both public debt and inequality continue to increase.

Suggested Citation

  • Maebayashi, Noritaka & Konishi, Kunihiko, 2021. "Sustainability Of Public Debt And Inequality In A General Equilibrium Model," Macroeconomic Dynamics, Cambridge University Press, vol. 25(4), pages 874-895, June.
    • Handle: RePEc:cup:macdyn:v:25:y:2021:i:4:p:874-895_2
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    Cited by:

    1. Ken Tabata, 2021. "Redistributive Policy and R&D-based Growth," Discussion Paper Series 227, School of Economics, Kwansei Gakuin University.
    2. Maebayashi, Noritaka, 2021. "The pace of fiscal consolidations, fiscal sustainability, and welfare: An overlapping generations approach," MPRA Paper 112593, University Library of Munich, Germany, revised 30 Feb 2022.
    3. Maebayashi, Noritaka, 2023. "The pace of fiscal consolidations, fiscal sustainability, and welfare: An overlapping generations approach," Journal of Macroeconomics, Elsevier, vol. 75(C).
    4. Aso Hiroki & Ueshina Mitsuru, 2023. "Fertility, fiscal deficit and sustainability of public debt in an endogenous growth model," Economics and Business Review, Sciendo, vol. 9(3), pages 224-238, October.
    5. Daisuke Miyashita, 2023. "Public debt and income inequality in an endogenous growth model with elastic labor supply," International Journal of Economic Policy Studies, Springer, vol. 17(2), pages 447-472, August.
    6. Maebayashi, Noritaka, 2021. "Paces of fiscal consolidations, fiscal sustainability, and welfare: An overlapping generations approach," MPRA Paper 109059, University Library of Munich, Germany.

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