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A Note on Public-Debt Sustainability in an Economy with Declining Fertility

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  • Atsumasa Kondo

Abstract

This note studies the relationship between population change and a government's long-term fiscal health. It uses an equilibrium model with dynamic optimization to investigate a situation in which a government repays its fiscal liabilities using tax revenues. The focus is on an upper bound on fiscal liability that is compatible with a no-Ponzi-game condition. The investigation deals, in particular, with how the upper bound depends on population size, population growth rate, and primary fiscal balance per person.

Suggested Citation

  • Atsumasa Kondo, 2012. "A Note on Public-Debt Sustainability in an Economy with Declining Fertility," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(2), pages 153-164, June.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201206)68:2_153:anopsi_2.0.tx_2-7
    DOI: 10.1628/001522108X639963
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    References listed on IDEAS

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    1. Fukuda, Shinichi & Teruyama, Hiroshi, 1994. "The Sustainability of Budget Deficits in Japan," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 35(2), pages 109-119, December.
    2. Henning Bohn, 1998. "The Behavior of U. S. Public Debt and Deficits," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 949-963.
    3. Barro, Robert J & Becker, Gary S, 1989. "Fertility Choice in a Model of Economic Growth," Econometrica, Econometric Society, vol. 57(2), pages 481-501, March.
    4. Alfred Greiner, 2007. "An Endogenous Growth Model With Public Capital And Sustainable Government Debt," The Japanese Economic Review, Japanese Economic Association, vol. 58(3), pages 345-361, September.
    5. Gary S. Becker & Robert J. Barro, 1988. "A Reformulation of the Economic Theory of Fertility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(1), pages 1-25.
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    Citations

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    Cited by:

    1. Atsumasa Kondo, 2016. "Sustainability of Public Debt in an AK Model with Complex Tax System," Discussion Papers CRR Discussion Paper Series A: General 21, Shiga University, Faculty of Economics,Center for Risk Research.
    2. KONDO Atsumasa, "undated". "The Role of Productivity Growth Rates for Rising Inequality in an Economy with Heterogeneous Agents," ESRI Discussion paper series 326, Economic and Social Research Institute (ESRI).
    3. Atsumasa Kondo, 2016. "Interconnection of Fiscal Policies on Sustainability of Public Debt," Discussion Papers CRR Discussion Paper Series A: General 20, Shiga University, Faculty of Economics,Center for Risk Research.

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    More about this item

    Keywords

    public-debt sustainability; population growth rate; no-Ponzi-game condition;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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