The Effectiveness of Government Debt and Transfers as Insurance

Martin Flodén

No 377, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: Government debt and redistributive taxation can help people to smooth consumption when facing uninsurable individual specific risk. I examine the effects that variations in public debt and transfers have on risk sharing, efficiency, and the distribution of resources. I find that risk sharing can be improved significantly by both debt and transfers, but that debt has adverse effects on equity. When used in isolation, debt will enhance welfare if transfers are lower than optimal. However, the beneficial effects of public debt vanish if transfers are used optimally.

Keywords: redistributive taxation; public debt; idiosyncratic risk; fiscal policy; social insurance; welfare measures (search for similar items in EconPapers)
JEL-codes: E21 E62 H21 H60 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2000-03-15
New Economics Papers: this item is included in nep-cdm, nep-dge, nep-ias and nep-pbe
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in Journal of Monetary Economics, 2001, pages 81-108.

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: The effectiveness of government debt and transfers as insurance (2001)
Working Paper: The Effectiveness of Government Debt and Transfers as Insurance (2000)
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:hhs:hastef:0377

Access Statistics for this paper

More papers in SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Helena Lundin ().