Fiscal Policy with Impure Intergenerational Altruism

Andrew Abel () and B. Douglas Bernheim ()

Econometrica, 1991, vol. 59, issue 6, pages 1687-1711

Abstract: Recent work demonstrates that dynastic assumptions guarantee the irrelevance of redistributional policies, distortionary taxes, and prices--the neutrality of fiscal policy (Ricardian equivalence) is only the "tip of the iceberg." This paper investigates the possibility of reinstating approximate Ricardian equivalence by introducing a small amount of friction in intergenerational links. If Ricardian equivalence depends upon significantly shorter chains of links than do these stronger neutrality results, then friction may dissipate the effects that generate strong neutrality, without significantly affecting the Ricardian result. However, models with friction have other untenable implications and, thus, the theoretical case for Ricardian equivalence remains tenuous. Copyright 1991 by The Econometric Society.

Date: 1991
View citations in EconPapers

Downloads: (external link)
http://links.jstor.org/sici?sici=0012-9682%2819911 ... O%3B2-U&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: Fiscal Policy With Impure Intergenerational Altruism (1992)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.blackwell ... mb.asp?ref=0012-9682

Access Statistics for this article

Econometrica is edited by Stephen Morris

More articles in Econometrica from Econometric Society
Contact information at EDIRC.
Series data maintained by Christopher F. Baum ().