Debt-Financed Transfers, Public Consumption and Public Investment in an Open Economy
1985 (English)Report (Other academic)
The paper compares the welfare implications for two consecutive generations of debt-financed public spending of three different types - tansfer payments, public consumption and public (infrastructure) investment. The analysis is performed by means of an overlapping generations model with the consumption of a publicly provided good in the utility function of the consumer and the stock of public productive capital in the private sector's production function. The standard overlapping generations model is extended also to include work in the second period of the individual's life and asset holdings in his/her preference function. It is shown how the utility effects on different generations depend not only on the type of spending but also on the implications of the spending for future tax (transfer) payments, as well as on the initial levels of public consumption and public capital.
Place, publisher, year, edition, pages
Stockholm: IIES , 1985. , 51 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 330
IdentifiersURN: urn:nbn:se:su:diva-41357OAI: oai:DiVA.org:su-41357DiVA: diva2:329572