The Welfare Costs of Deficit Finance
AbstractThe authors analyze the welfare consequences of deficit finance in a gene ral equilibrium model fit to the U.S. economy. Current spending may b e financed with current and/or future distortionary taxes. The econom y is open to international capital flows. The welfare costs of financ ing marginal current spending are substantial and are sensitive to th e timing of the required taxes; postponing a tax on labor income is a dvantageous, but postponing a tax on asset income is not. Ricardian e quivalence poorly approximates the economy considered. Copyright 1987 by Oxford University Press.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 25 (1987)
Issue (Month): 3 (July)
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- Maria Carme Riera i Prunera, 2003. "Deficit, human capital and economic growth dynamics," Working Papers in Economics 102, Universitat de Barcelona. Espai de Recerca en Economia.
- Riera Prunera, Maria Carmen, 2000. "A Role For Deficit In Economic Growth," ERSA conference papers ersa00p335, European Regional Science Association.
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