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On redistribution effects of public debt amongst single-minded generations

Author

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  • Canegrati, Emanuele

Abstract

In this paper I will introduce a new political economy model, where there exists a competition amongst two political candidates, which aim to set a policy which enables them to win elections, max- imising the probability of winning. I will show that, if taxes neces- sary to repay the debt are not lump sum but proportional to income, we have dramatic distorting effect on the labour supply. The prob- lem is exacerbate once we take into account that the Government set taxes in order to favour the most in‡uencing social group. As a consequence, effective marginal tax rates are differentiated amongst social groups and thus the burden of public debt is not equally borne.

Suggested Citation

  • Canegrati, Emanuele, 2007. "On redistribution effects of public debt amongst single-minded generations," MPRA Paper 2254, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2254
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    File URL: https://mpra.ub.uni-muenchen.de/2254/1/MPRA_paper_2254.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    public debt; single-mindedness; intergenerational redistribution;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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