The Economic Effects of Restrictions on Government Budget Deficits: Imperfect Privte Credit Markets

Christian Ghiglino and Karl Shell ()

Working Papers from Cornell University, Center for Analytic Economics

Abstract: We consider a pure-exchange overlapping-generations model We consider a pure-exchange overlapping-generations model with many consumers per generation and many goods per period. As in Ghiglino and Shell (2000), there is a government that collects taxes, distributes transfers and faces budget deficit restrictions. We introduce, for realism and symmetry with the government, imperfection in the private credit markets. We find that with constraints on individual credit and anonymous (i.e., non-personalized) lump-sum taxes, strong (or 'global') irrelevance of the government budget deficit is not possible, and weak irrelevance can hold only in very special situations. With credit constraints and anonymous consumption taxes, weak irrelevance holds provided the number of tax instruments is sufficiently large and at least one consumer's credit constraint is not binding.

JEL-codes: D51 E52 E62 H62 H63 O23 (search for similar items in EconPapers)
Date: 2001-08
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cae.economics.cornell.edu/deficitcredswp.pdf

Related works:
Journal Article: The economic effects of restrictions on government budget deficits: imperfect private credit markets (2003)
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:ecl:corcae:01-11

Access Statistics for this paper

More papers in Working Papers from Cornell University, Center for Analytic Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().