Being and Consciousness: Fiscal Attitudes according to HANK

Christian Bayer, Alexander Kriwoluzky, Müller, Gernot and Fabian Seyrich

No 20473, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Attitudes toward fiscal policy differ: "fiscal conservatism" and "fiscal liberalism" vary in their willingness to tolerate budget deficits. We challenge the view that such attitudes reflect national preferences. Instead, we offer an economic explanation based on a two-country Heterogeneous Agent New Keynesian model, bringing its implicit political economy dimension to the forefront. We compute the welfare implications of alternative fiscal policies at the household level to assess the conditions under which a policy commands majority support. Whether the majority supports fiscal conservatism or liberalism depends on a country’s debt level, its wealth distribution, and the nature of the economic shock.

Keywords: Two-country model; Government debt (search for similar items in EconPapers)
JEL-codes: E32 F45 H63 (search for similar items in EconPapers)
Date: 2025-07
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP20473 (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:cpr:ceprdp:20473

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP20473

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().