The economic effects of restrictions on government budget deficits: imperfect private credit markets
AbstractThe present paper is an extension of Ghiglino and Shell  to the case of imperfect consumer credit markets. We show that with constraints on individual credit and only anonymous (i.e., non-personalized) lump-sum taxes, strong (or “global”) irrelevance of government budget deficits is not possible, and weak (or “local”) irrelevance can hold only in very special situations. This is in sharp contrast to the result for perfect credit markets. With credit constraints and anonymous consumption taxes, weak irrelevance holds if the number of tax instruments is sufficiently large and at least one consumer's credit constraint is not binding. This is an extension of the result for perfect credit markets. Copyright Springer-Verlag Berlin Heidelberg 2003
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 21 (2003)
Issue (Month): 2 (03)
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
Other versions of this item:
- Ghiglino, Christian & Shell, Karl, 2001. "The Economic Effects of Restrictions on Government Budget Deficits: Imperfect Privte Credit Markets," Working Papers 01-11, Cornell University, Center for Analytic Economics.
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
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- Evans, Richard W. & Phillips, Kerk L., 2010. "OLG fife cycle model transition paths: alternate model forecast method," MPRA Paper 24548, University Library of Munich, Germany.
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