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

Real Arai (), Katsuyuki Naito and Tetsuo Ono ()

Journal of Public Economics, 2018, vol. 166, issue C, 39-52

Abstract: This study presents a two-period overlapping-generations model with endogenous growth. In each period, the government representing young and old generations 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; Economic growth (search for similar items in EconPapers)
JEL-codes: D72 H41 H63 O43 (search for similar items in EconPapers)
Date: 2018
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