Political Economy of Taxation, Debt Ceilings, and Growth

Yuki Uchida and Tetsuo Ono

MPRA Paper from University Library of Munich, Germany

Abstract: This study presents voting on policies including labor and capital income taxes and public debt in an overlapping-generations model with physical and human capital accumulation, and it then analyzes the effects of a debt ceiling on a government's policy formation and its impact on growth and welfare. The debt ceiling induces the government to shift the tax burdens from the older to younger generations, but stimulates physical capital accumulation and may increase public education expenditure, resulting in a higher growth rate. Alternatively, the debt ceiling is measured from the viewpoint of a benevolent planner; lowering the debt ceiling (i.e., tightening fiscal discipline) makes it possible for the government to approach the planner's allocation in an aging society.

Keywords: Debt ceiling; Probabilistic voting, Public debt, Economic growth, Overlapping generations (search for similar items in EconPapers)
JEL-codes: D70 E24 H63 (search for similar items in EconPapers)
Date: 2020-03-31
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/99455/1/MPRA_paper_99455.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/103578/1/MPRA_paper_99455.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/103578/8/MPRA_paper_103578.pdf revised version (application/pdf)

Related works:
Journal Article: Political economy of taxation, debt ceilings, and growth (2021)
Working Paper: Political Economy of Taxation, Debt Ceilings, and Growth (2019)
Working Paper: Political Economy of Taxation, Debt Ceilings, and Growth (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99455

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().