The Perceived Government Budget Constraint

Takuji Fueki, Masashi Hino, Mitsuru Katagiri, Munechika Katayama and Taisuke Nakata
Additional contact information
Takuji Fueki: Hitotsubashi University
Masashi Hino: The University of Tokyo
Mitsuru Katagiri: Waseda University
Munechika Katayama: Waseda University
Taisuke Nakata: The University of Tokyo

No CARF-F-625, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

Abstract: We conduct a survey with an information-provision experiment to examine whether households’ macroeconomic expectations are consistent with the intertemporal government budget constraint (GBC). Using respondents’ forecasts of the debt-to-GDP ratio, inflation, interest rates, the primary balance, and real GDP growth, we compute the discrepancy between the left- and right-hand sides of the intertemporal GBC—which we refer to as the GBC wedge. We find that the GBC wedge is dispersed and, on average, non-zero. We also find that households revise their macroeconomic expectations in response to information provision in a way that is inconsistent with the intertemporal GBC.

Pages: 45
Date: 2026-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.carf.e.u-tokyo.ac.jp/wp/wp-content/uploads/2026/05/F625.pdf (application/pdf)

Related works:
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:cfi:fseres:cf625

Access Statistics for this paper

More papers in CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo Contact information at EDIRC.
Bibliographic data for series maintained by ().