Beliefs About Public Debt and the Demand for Government Spending
Sonja Settele () and
Johannes Wohlfahrt ()
Additional contact information
Sonja Settele: Center for Economic Behavior and Inequality (CEBI) and Department of Economics, University of Copenhagen, Oster Farimagsgade 5, Building 35, 1353 Copenhagen K, Denmark
Johannes Wohlfahrt: Center for Economic Behavior and Inequality (CEBI) and Department of Economics, University of Copenhagen, Oster Farimagsgade 5, Building 35, 1353 Copenhagen K, Denmark; Danish Finance Insitute (DFI), Solbjerg Plads 3, A4.03, 2000 Frederiksberg, Denmark
No 178, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany
We examine how beliefs about the debt-to-GDP ratio aﬀect people’s attitudes towards gov-ernment spending and taxation. Using representative samples of the US population, we run a series of experiments in which we provide half of our respondents with information about the debt-to-GDP ratio in the US. Based on a total of more than 4,000 respondents, we ﬁnd that most people underestimate the debt-to-GDP ratio and reduce their support for government spending once they learn about the actual amount of debt, but do not substan-tially alter their attitudes towards taxation. The treatment eﬀects seem to operate through changes in expectations about ﬁscal sustainability and persist in a four-week follow-up.
Keywords: Government Debt; Political Attitudes; Beliefs; Expectations; Information (search for similar items in EconPapers)
JEL-codes: E60 P16 Z13 (search for similar items in EconPapers)
Pages: 84 pages
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_178_2022.pdf First version, 2022 (application/pdf)
Working Paper: Beliefs about Public Debt and the Demand for Government Spending (2020)
Working Paper: Beliefs About Public Debt and the Demand for Government Spending (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:178
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