Debt, Death and Taxes
AbstractDoes the level of government debt affect living standards and if so, to what extent? We quantify the impact of the U.S. federal debt using an open economy overlapping generations model in which consumers have long but finite lifetimes. A demographic structure allows fiscal policy changes to have different effects on different agents, and reveals the linkages between public debt, output and international trade. We find that reducing the debt has relatively modest impacts on aggregates, while reducing government spending substantially raises U.S. incomes and welfare. Therefore, this paper contributes to the current debate regarding whether U.S. federal government budget surpluses should be used to retire government debt. Copyright Kluwer Academic Publishers 2002
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 Springer in its journal International Tax and Public Finance.
Volume (Year): 9 (2002)
Issue (Month): 2 (March)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=102915
debt; fiscal policy; overlapping generations; computable general equilibrium models;
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.:
- John F. Helliwell, 1990. "Fiscal Policy and the External Deficit: Siblings, but not Twins," NBER Working Papers 3313, National Bureau of Economic Research, Inc.
- Robert J. Barro, 1988.
"The Ricardian Approach to Budget Deficits,"
NBER Working Papers
2685, National Bureau of Economic Research, Inc.
- Laurence Ball & N. Gregory Mankiw, 1995.
"What do Budget Deficits Do?,"
Harvard Institute of Economic Research Working Papers
1740, Harvard - Institute of Economic Research.
- Laurence Ball & N. Gregory Mankiw, 1995. "What do budget deficits do?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 95-119.
- McKibbin, W.J. & Bagnoli, P., 1993.
"Fiscal Deficit Reduction: An Avaluation of Alternatives,"
100, Brookings Institution - Working Papers.
- W. J. McKibbin & P. Bagnoli, . "Fiscal Deficit Reduction: An Evaluation of Alternatives," Discussion Papers 101, Brookings Institution International Economics.
- John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15.
- Alogoskoufis, George S, 1987. "On Intertemporal Substitution and Aggregate Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 938-60, October.
- Seater, John J, 1993. "Ricardian Equivalence," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 142-90, March.
- Barro, Robert J, 1974.
"Are Government Bonds Net Wealth?,"
Journal of Political Economy,
University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
- Yellen, Janet L, 1989. "Symposium on the Budget Deficit," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 17-21, Spring.
- S. Rao Aiyagari & Ellen R. McGrattan, 1994.
"The optimal quantity of debt,"
538, Federal Reserve Bank of Minneapolis.
- Aschauer, David Alan, 1985. "Fiscal Policy and Aggregate Demand," American Economic Review, American Economic Association, vol. 75(1), pages 117-27, March.
- Buiter, Willem H, 1981.
"Time Preference and International Lending and Borrowing in an Overlapping-Generations Model,"
Journal of Political Economy,
University of Chicago Press, vol. 89(4), pages 769-97, August.
- Willem H. Buiter, 1979. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," NBER Working Papers 0352, National Bureau of Economic Research, Inc.
- Aschauer, David Alan, 1989.
"Is public expenditure productive?,"
Journal of Monetary Economics,
Elsevier, vol. 23(2), pages 177-200, March.
- B. Douglas Bernheim, 1988.
"Ricardian Equivalence: An Evaluation of Theory and Evidence,"
NBER Working Papers
2330, National Bureau of Economic Research, Inc.
- B. Douglas Bernheim, 1987. "Ricardian Equivalence: An Evaluation of Theory and Evidence," NBER Chapters, in: NBER Macroeconomics Annual 1987, Volume 2, pages 263-316 National Bureau of Economic Research, Inc.
- R. Mehra & E. Prescott, 2010.
"The equity premium: a puzzle,"
Levine's Working Paper Archive
1401, David K. Levine.
- Christiano, Lawrence J., 1988. "Why does inventory investment fluctuate so much?," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 247-280.
- Fumio Hayashi, 1985. "Tests for Liquidity Constraints: A Critical Survey," NBER Working Papers 1720, National Bureau of Economic Research, Inc.
- Hurd, Michael D, 1989. "Mortality Risk and Bequests," Econometrica, Econometric Society, vol. 57(4), pages 779-813, July.
- Eisner, Robert, 1989. "Budget Deficits: Rhetoric and Reality," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 73-93, Spring.
- Evans, Paul & Karras, Georgios, 1994. "Are Government Activities Productive? Evidence from a Panel of U.S. States," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 1-11, February.
- Frenkel, Jacob A & Razin, Assaf, 1987. "Fiscal Policies and the World Economy; An Intertemporal Approach (Cambridge, Mass.: MIT Press, 1987)," MPRA Paper 20438, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.