Being and Consciousness: Fiscal Attitudes according to HANK

Christian Bayer, Alexander Kriwoluzky, Müller, Gernot and Fabian Seyrich
Authors registered in the RePEc Author Service: Gernot J. Müller

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

Abstract: Cross-country differences in fiscal attitudes need not reflect deep-rooted national preferences. We show this by bringing the latent political-economy dimension of HANK models to the fore and applying it to a central monetary-union issue: the national fiscal stance. Comparing household-level welfare under alternative budgetary policies reveals variation in ``fiscal preferences'' within countries and distinct voting majorities across countries. These majorities depend on initial public debt and the underlying shock: following a monetary tightening, the majority supports a balanced-budget policy when debt is low but deficit financing when debt is high. Following a government-spending increase, even low-debt countries support deficit financing.

Keywords: Two-country model; Budget deficits; Fiscal policy (search for similar items in EconPapers)
JEL-codes: E32 F45 H63 (search for similar items in EconPapers)
Date: 2025-07
New Economics Papers: this item is included in nep-dge and nep-opm
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Related works:
Working Paper: Being and Consciousness: Fiscal Attitudes according to HANK (2025)
Working Paper: Being and Consciousness: Fiscal Attitudes according to HANK (2025)
Working Paper: Being and Consciousness: Fiscal Attitudes according to HANK (2025)
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