On the irrelevance of government debt when taxes are distortionary

On the irrelevance of government debt when taxes are distortionary

We consider a government that can only raise funds by levying distortionary taxes. We allow the government to collect taxes in a given period that are based on incomes earned in previous periods. We show that once we do so, given any debt path, the government can adjust its tax policy so as to attai...

Ausführliche Beschreibung

Gespeichert in:
Bibliographische Detailangaben
Veröffentlicht in:Journal of monetary economics 2004-03, Vol.51 (2), p.299-304
Hauptverfasser: Bassetto, Marco, Kocherlakota, Narayana
Format: Artikel
Sprache:eng
Schlagworte:
Distortionary taxes
Economic models
Economics
Equilibrium
Equivalence
Finance
Fiscal policy
Government debt
Monetary economics
Public debt
Ricardian equivalence
Sovereign debt
Studies
Taxation
Taxes
Online-Zugang:Volltext
Tags: Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
Beschreibung
Zusammenfassung:We consider a government that can only raise funds by levying distortionary taxes. We allow the government to collect taxes in a given period that are based on incomes earned in previous periods. We show that once we do so, given any debt path, the government can adjust its tax policy so as to attain that debt path without affecting equilibrium allocations or prices.
ISSN:0304-3932
1873-1295
DOI:10.1016/j.jmoneco.2002.12.001