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The Neutrality of Optimal Government Financial Policy: Supplying the Intergenerational Free Lunch

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  • Dean D. Croushore

Abstract

This paper demonstrates the usefulness and simplicity of the overlapping-generations model for analyzing certain types of macroeconomic problems. An overlapping-generations model is used to clarify and interpret some existing neutrality theorems concerning government debt and monetization. The results demonstrate the stringency of the conditions needed for neutrality, suggesting that money and government debt are very unlikely to be neutral.

Suggested Citation

  • Dean D. Croushore, 1987. "The Neutrality of Optimal Government Financial Policy: Supplying the Intergenerational Free Lunch," Eastern Economic Journal, Eastern Economic Association, vol. 13(2), pages 123-136, Apr-Jun.
    • Handle: RePEc:eej:eeconj:v:13:y:1987:i:2:p:123-136
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume13/V13N2P123_136.pdf
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    References listed on IDEAS

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    Cited by:

    1. Fred Wallace, 1989. "The Neutrality of Optimal Government Financial Policy: Supplying the Intergenerational Free Lunch: A Comment," Eastern Economic Journal, Eastern Economic Association, vol. 15(2), pages 147-150, Apr-Jun.
    2. Dean D. Croushore, 1989. "What Neutrality Means in Macroeconomics: Reply," Eastern Economic Journal, Eastern Economic Association, vol. 15(2), pages 150-152, Apr-Jun.

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