 Intergenerational Politics, Government Debt and Economic GrowthNo 14-23, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics Abstract: This paper develops a two-period overlapping-generations model featuring en- dogenous growth and intergenerational conflict over fiscal policy. In particular, the paper characterizes a Markov-perfect political equilibrium of the voting game be- tween generations, and shows the following results. First, in an unbalanced budget case, the government borrows or lends in the capital market depending on the share of capital in production. Second, when the government borrows in the capital mar- ket, an introduction of a balanced budget rule results in a higher growth rate. Third, to obtain a normative implication of the political equilibrium, the paper considers a benevolent planner with a commitment technology, and shows that the planner always chooses to lend in the capital market to save more for future generations and thus attains a higher growth rate than the government in a political equilibrium. Keywords: Economic Growth; Government Debt; Overlapping Generations; Pop- ulation Aging; Probabilistic Voting (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1423 Access Statistics for this paper More papers in Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics Contact information at EDIRC. |
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