EconPapers    
Economics at your fingertips  
 

Debt, Deficits and Finite Horizons

Olivier Blanchard ()

No 1389, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Many issues in macroeconomics, such as the level of the steady state interest rate, or the dynamic effects of government deficit finance, depend crucially on the horizon of economic agents. This paper develops a simple analytical model in which such issues can be examined and in which the horizon of agents is a parameter which can be chosen arbitrarily.The first three sections of the paper characterize the dynamics and steady state of the economy in the absence of a government. The focus is on the effects of the horizon index on the economy. The paper clarifies in particular the separate roles of finite horizons and declining labor income through life in the determination of steady state interest rates.The next three sections study the effects and the role of fiscal policy.The focus is on the effects of deficit finance both in closed and open economies. The paper clarifies the respective roles of government spending, deficits and debt in the determination of interest rates.

Date: 1984-06
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed

Published as Blanchard, Olivier J. "Debt, Deficits and Finite Horizons," Journal of Political Economy, Vol. 92, No. 2, April 1985, pp. 223-247.

Downloads: (external link)
http://www.nber.org/papers/w1389.pdf (application/pdf)

Related works:
Journal Article: Debt, Deficits, and Finite Horizons (1985) Downloads
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:nbr:nberwo:1389

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w1389

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2019-04-12
Handle: RePEc:nbr:nberwo:1389