Precautionary Saving and the Timing of Taxes
AbstractThis paper analyzes the effects of government debt and income taxes on consumption and saving in a world of infinitely-lived households having uncertain and heterogeneous incomes. The special structure of the model allows exact aggregation across households despite incomplete markets. The effects of government debt are shown to be substantial, roughly comparable to those resulting from finite horizons, and crucially dependent on the length of time until the debt is repaid. Also, anticipated changes in taxes are shown to cause anticipated changes in consumption. Finally, an index of fiscal stance is derived. Copyright 1989 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 97 (1989)
Issue (Month): 4 (August)
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Other versions of this item:
- Miles S. Kimball & N. Gregory Mankiw, 1988. "Precautionary Saving and the Timing of Taxes," NBER Working Papers 2680, National Bureau of Economic Research, Inc.
- Kimball, Miles S. & Mankiw, N. Gregory, 1989. "Precautionary Saving and the Timing of Taxes," Scholarly Articles 3443105, Harvard University Department of Economics.
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