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James Buchanan’s public debt theory: a rational reconstruction

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  • Richard Wagner

Abstract

James Buchanan’s Public Principles of Public Debt is universally associated with the claim that debt allows the cost of public activity to be shifted onto future generations. This claim treats a generation as a unitary and acting entity. Such treatment is standard fare for those macro theorists who work with representative agents and societal averages in place of the actual individuals who constitute a society. This treatment, however, conflicts with the central tenor of Buchanan’s scholarly oeuvre. This essay undertakes a rational reconstruction to render reasonable his claim about debt shifting, while also rendering it consistent with his oft-repeated claim that cost can be experienced only by individuals and never by such aggregates as generations. This reconstruction reveals a cleavage between approaching public debt through macro theory and approaching it through public finance. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Richard Wagner, 2014. "James Buchanan’s public debt theory: a rational reconstruction," Constitutional Political Economy, Springer, vol. 25(3), pages 253-264, September.
    • Handle: RePEc:kap:copoec:v:25:y:2014:i:3:p:253-264
    DOI: 10.1007/s10602-014-9161-3
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    References listed on IDEAS

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    1. Giuseppe Eusepi & Richard E. Wagner, 2013. "Tax Prices in a Democratic Polity: The Continuing Relevance of Antonio de Viti de Marco," History of Political Economy, Duke University Press, vol. 45(1), pages 99-121, Spring.
    2. Richard E. Wagner, 2012. "Deficits, Debt, and Democracy," Books, Edward Elgar Publishing, number 14477.
    3. James M. Buchanan, 1949. "The Pure Theory of Government Finance: A Suggested Approach," Journal of Political Economy, University of Chicago Press, vol. 57, pages 496-496.
    4. Buchanan, James M, 1985. "The Moral Dimension of Debt Financing," Economic Inquiry, Western Economic Association International, vol. 23(1), pages 1-6, January.
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    1. Bischi, Gian Italo & Giombini, Germana & Travaglini, Giuseppe, 2022. "Monetary and fiscal policy in a nonlinear model of public debt," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 397-409.

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    More about this item

    Keywords

    Public Principles of Public Debt ; Burden of public debt; Morality of public debt; Debt default; Representative agent macro; Coalition-based macro; B22; D72; E62; H63;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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