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

Real Arai, Katsuyuki Naito and Tetsuo Ono

No 18-12, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

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.

Keywords: public debt; probabilistic voting; Markov perfect equilibrium; eco- nomic growth (search for similar items in EconPapers)
JEL-codes: D72 H41 H63 O43 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2018-04
New Economics Papers: this item is included in nep-dge, nep-gro and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Journal Article: Intergenerational policies, public debt, and economic growth: A politico-economic analysis (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1812

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