Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104385
Authors: 
Schlicht, Ekkehart
Year of Publication: 
2012
Series/Report no.: 
Munich Discussion Paper 2012-4
Abstract: 
This note generalizes Feldstein’s (1976) criticism of Barro’s(1974) analysis 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
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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