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Intergenerational policies, public debt, and economic growth: a politico-economic analysis

Author

Listed:
  • Real Arai

    () (Department of Management, Kochi University of Technology)

  • Katsuyuki Naito

    () (Faculty of Economics, Asia University)

  • Tetsuo Ono

    () (Graduate School of Economics, Osaka University)

Abstract

This study presents a two-period overlapping-generations model with endoge- nous growth. In each period, the government representing young and old gener- ations provides a public good financed by labor income taxation and public debt issuance, and the government's policies are determined by probabilistic voting. Increased political power of the old lowers economic growth. A debt-ceiling rule is considered to resolve the negative growth effect, but it creates a trade-off between generations in terms of welfare.

Suggested Citation

  • Real Arai & Katsuyuki Naito & Tetsuo Ono, 2018. "Intergenerational policies, public debt, and economic growth: a politico-economic analysis," Discussion Papers in Economics and Business 18-12, Osaka University, Graduate School of Economics.
  • Handle: RePEc:osk:wpaper:1812
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    References listed on IDEAS

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    Cited by:

    1. Tetsuo Ono & Yuki Uchida, 2018. "Political Economy of Taxation, Debt Ceilings, and Growth," Discussion Papers in Economics and Business 18-22, Osaka University, Graduate School of Economics.

    More about this item

    Keywords

    public debt; probabilistic voting; Markov perfect equilibrium; eco- nomic growth;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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