 A Debt Projection Model. Chapter 3 in Tax Policy and Uncertainty, 2020, pp 29-72 from Edward Elgar Publishing Abstract: This chapter produces a long-term debt model containing feedback effect, which may enhance or modify the intended or initial consequences of those responses. For example, tax and expenditure policy changes might be implemented to deal with a fiscal deficit, while the interest rate may vary endogenously as a result of risk-premium adjustments to debt levels. The feedback effects are modelled using reduced-form specifications rather than a structural approach with explicit optimising behaviour. The model nevertheless contains a sufficient amount of detail to enable a range of policy responses to be examined. The present chapter considers policy variations needed to achieve a specified fiscal balance at the end of the projection period. To make the model as transparent as possible, a high level of aggregation is used. Demographic variations in both population size and its age composition influence government expenditure and revenue. While detailed demographic projections are used, distinctions are drawn only between those of working age, retirement age and those below working age. Keywords: Economics and Finance; Politics and Public Policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:20207_3 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Chapters from Edward Elgar Publishing |
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