Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/55513
Authors: 
Schlicht, Ekkehart
Year of Publication: 
2012
Series/Report no.: 
Economics Discussion Papers 2012-13
Abstract: 
The paper generalizes Feldstein's criticism (Perceived Wealth in Bonds and Social Security, 1976) of Barro's analysis (Are Government Bonds Real Net Wealth?, 1974) for the case that the interest rate exceeds the growth rate. This is done by considering an economy in steady state where all agents hold Barro expectations: they believe that government debt must necessarily be repaid and therefore leave the present value of their income streams unchanged. In this scenario, a change in the mode of taxation affects the present value of disposable income in the private sector. This violates their Barro expectations.
Subjects: 
Barro-Ricardo equivalence
Ricardian equivalence
fiscal policy
debt
taxation
rational expectations
JEL: 
E2
E12
E6
H6
Creative Commons License: 
http://creativecommons.org/licenses/by-nc/2.0/de/deed.en
Document Type: 
Working Paper

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