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Intra-Generational Conflict: The Role of Balanced Budget Rules

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  • Niepelt, Dirk

    () (Institute for International Economic Studies, Stockholm University)

Abstract

A balanced budget requirement directly affects the intra-generational wealth distribution and influences the level of government spending. Both effects give rise to distributive conflicts that can explain why some groups support balanced budget rules while other groups in the same generation oppose them. Simulations suggest that such distributive conflicts are prevalent. I argue that intra-generational distributive conflicts offer a more convincing explanation for the observed partial support for balanced budget rules than alternative theories based on inter-generational conflict or efficiency considerations.

Suggested Citation

  • Niepelt, Dirk, 2003. "Intra-Generational Conflict: The Role of Balanced Budget Rules," Seminar Papers 722, Stockholm University, Institute for International Economic Studies.
  • Handle: RePEc:hhs:iiessp:0722
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    References listed on IDEAS

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    1. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2005. "A Positive Theory Of Geographic Mobility And Social Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 263-303, February.
    2. Kjetil Storesletten & Chris Telmer & Amir Yaron, 2007. "Asset Pricing with Idiosyncratic Risk and Overlapping Generations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(4), pages 519-548, October.
    3. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2003. "The Survival of the Welfare State," American Economic Review, American Economic Association, vol. 93(1), pages 87-112, March.
    4. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    5. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
    6. Storesletten, Kjetil & Telmer, Christopher I. & Yaron, Amir, 2004. "Consumption and risk sharing over the life cycle," Journal of Monetary Economics, Elsevier, vol. 51(3), pages 609-633, April.
    7. Alberto Alesina & Roberto Perotti, 1994. "The Political Economy of Budget Deficits," NBER Working Papers 4637, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    balanced budget rules; intra-generational conflict; government spending; wealth distribution;

    JEL classification:

    • 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

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