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on Public Economics |
| By: | John T. Revesz (Australian Public Service) |
| Abstract: | This report examines the structure of optimal commodity tax rates in a many-person many-goods static computational model using segmented LES utility. One of the major findings is that with non-linear Engel curves and linear income tax, optimal commodity tax rates tend to be progressive and highly dispersed under logarithmic utility specifications. However, the dispersion of tax rates is considerably reduced if the inequality aversion of society is low or if tax evasion depends among other things on disparities between commodity tax rates. With exogenously given non-optimal and non-linear income tax schedules, usually there is still a need for differentiated and progressive commodity taxation. Tax evasion tends to reduce optimal tax rates for necessities but increases them for luxuries. Private compliance costs and government administration costs reduce optimal tax rates by a similar amount to the share of these costs from taxes. The results indicate that in a redistributive model the effect of externalities on optimal tax rates exceeds the corresponding Pigovian tax rates or subsidies. The main benefit of higher taxes on leisure complements than leisure substitutes appears to relate to increased tax revenue for redistribution rather than improvement in the utility position of those paying the taxes. The effect of complexities such as tax evasion, administrative costs, externalities and leisure complements/substitutes on redistribution is not neutral. Generally, these complexities tend to increase the progressivity of optimal commodity tax rates. Explanations are provided why the numerical results presented here do not contradict the Laroque-Kaplow proposition, which advocates uniform commodity taxation. Some practical application problems and logical weaknesses of the Laroque-Kaplow proposition are noted. |
| Keywords: | optimal taxation, computational models |
| JEL: | C63 H21 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:gfe:pfrp00:0004&r=pbe |
| By: | Etienne Lehmann (CREST and CRED (TEPP) Universite Panth ´ eon-Assas); Laurent Simula (Uppsala Center for Fiscal Studies & Department of Economics, Uppsala University); Alain Trannoy (Aix-Marseille Universite (Aix-Marseille School of Economics) CNRS EHESS) |
| Abstract: | We investigate how potential tax-driven migrations modify the Mirrlees income tax schedule when two countries play Nash. The social objective is the maximin and preferences are quasilinear in consumption. Individuals differ both in skills and migration costs, which are continuously distributed. We derive the optimal marginal income tax rates at the equilibrium, extending the Diamond-Saez formula. We show that the level and the slope of the semi-elasticity of migration (on which we lack empirical evidence) are crucial to derive the shape of optimal marginal income tax. |
| Keywords: | optimal income tax, income tax competition, migration, labor mobility, Nash-equilibrium tax schedules |
| JEL: | D82 H21 H87 |
| Date: | 2014–05–14 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1415&r=pbe |
| By: | Gustavo Canavire-Bacarreza; Jorge Martínez-Vázquez; Violeta Vulovic |
| Abstract: | Tax policy is among the most common and relevant instruments in the toolkit of policy-makers when thinking about promoting growth, yet there is not compelling evidence regarding its effect in Latin American countries. Using a variety of approaches, we estimate the effects on growth of the most important taxes for the region, namely personal income tax, corporate income tax, general taxes on goods and services, including value added and other sales taxes, and revenues from natural resource. We evaluate the effect of these tax instruments on growth for Argentina, Brazil, Mexico, and Chile using vector autoregressive techniques, and for close to the entire region and a worldwide sample of developing and developed countries using panel data estimation. We find that, for the most part, personal income tax does not have the expected negative effect on economic growth in Latin America, which is largely explained by the small collections in the region. For corporate income tax, our results suggest reducing tax evasion and greater reliance on collection may boost economic growth in the region as a whole and especially for natural resource exporting countries. But, we also find small negative effects of corporate income tax on growth for individual countries, specifically Argentina, Mexico, and Chile. Finally, our results suggest that greater reliance on consumption taxes has significant positive effects on growth in Latin American in general, although we again find slight negative effects in some of the selected countries. On the other hand, natural resource revenues do not seem to contribute to growth. |
| Keywords: | Fiscal Policy, Investment, Social Security, taxation, growth, Latin America, personal income tax, corporate income tax, goods and sales tax, natural resources tax. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:81798&r=pbe |
| By: | Carlos Scartascini |
| Abstract: | The literature on taxes and public finance generally focuses on revenues, an easily observable and generally available variable, as the observable measure of tax policy. Still, revenues depend on many determinants other than the political will and policy objectives of the government. It is therefore important, when studying the politics of taxation, to evaluate specific changes to the tax code such as rates, bases and exemptions. With the underlying goal of exploring the political process and the determinants of tax policy, this paper compiles a novel and highly comprehensive database of tax reforms for Latin America between 1990 and 2004. The paper presents a description of the database as well as the stylized facts of tax reforms in Latin America. Examples of the database's uses are discussed, as is motivation for future research. |
| Keywords: | Revenue, Tax administration, Tax reform |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:83659&r=pbe |
| By: | Roberto Steiner |
| Abstract: | This Working Paper assesses the impact on investment of a reduction in corporate taxes and the impact on employment, labor formality, and growth of a reduction in non-wage labor costs in Colombia. First, and following Hall and Jorgensen (1967), we estimate an investment function, which depends on the user cost of capital, one of whose determinants is the corporate tax rate. Our estimations suggest that a reduction of the corporate tax rate from 33 to 23 percent--as originally envisioned by the government in early 2012, but finally not included in the reform submitted to Congress--has very different short and long-term effects on investment in machinery and equipment. While the user cost of capital declines 0.9 percent, investment (excluding the oil and mining sector) increases on impact only 28 bps in relation to GDP, an increase that does not compensate the fiscal cost incurred. In the long term, however, it is likely that the significant boost in investment (of around 5 percent of GDP) makes such a policy intervention fiscally sustainable. Second, using a computable general equilibrium model calibrated for Colombia, we estimate that the reduction of the "pure tax" component of non-wage labor costs approved in late 2012 is associated with a 0.5 percent increase in overall employment and, more importantly, with a 1.4 percent increase in formal sector employment. Our estimations indicate that this is achieved at no fiscal cost since government revenue increases as a result of higher output and employment. |
| Keywords: | Economic Development & Growth, Fiscal management, Taxation, Computable general equilibrium models, Investment, User cost of capital, Corporate taxation, Non-wage labor costs |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:84313&r=pbe |
| By: | Beckmann, Klaus (Helmut Schmidt University, Hamburg); Franz, Nele E. (University of Münster); Schneider, Andrea (University of Münster) |
| Abstract: | This paper considers optimal linear tax structures that are differentiated according to group membership. Groups can be heterogeneous with respect to both preferences and abilities. Contrary to most arguments in favour of tax privileges for certain groups, e.g. gender-based taxation, it is shown that consideration of the first moment of the relevant distributions (the average labour supply elasticity of the groups) is insufficient. We discuss the factors on which efficient differentiation would depend. |
| Keywords: | optimal linear income taxation; preference heterogeneity; gender-based taxation; horizontal equity |
| JEL: | D31 H21 |
| Date: | 2014–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:ris:vhsuwp:2014_144&r=pbe |
| By: | Lavinas, Lena; Moellmann Ferro, Thiago Andrade |
| Keywords: | tax system, tax reform, wage differential, Brazil, système fiscal, réforme fiscale, disparité des salaires, Brésil, sistema tributario, reforma tributaria, diferencia del salario, Brasil |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:485130&r=pbe |
| By: | Emilio Espino; Martín González Rozada |
| Abstract: | This paper explores the qualitative and quantitative implications of optimal taxation in a developing economy when economic growth is endogenously determined. We differentiate this class of economies from a developed economy in two aspects: informal sector is quantitatively significant and tax-collecting technologies are more rudimentary. We characterize competitive equilibrium allocations and Ramsey allocations in the context of a small open economy in which the interest rate is endogenously determined, some workers can be hired in the informal market, and imperfect tax-collecting technology can be heterogeneous across different types of taxes. We calibrate the parameters of our model to the Chilean economy. Overall, our results suggest that capital should still be taxed but considerably less than actual taxes (that is, 10.78 percent versus 18.5 percent). Labor should be subsidized (to stimulate accumulation of human capital), while consumption taxes should be increased by 50 percent approximately (from 19 percent to 28 percent). As expected, the better the tax collecting technologies, the higher the corresponding taxes. In this context, the resulting growth rate increases only slightly along the balanced growth path. |
| Keywords: | Economic Development & Growth, Fiscal Policy, Optimal fiscal growth, economic growth, inefficient tax collecting technology |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:82531&r=pbe |
| By: | Etienne Lehmann; Claudio Lucifora; Simone Moriconi; Bruno Van Der Linden |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:tep:teppwp:wp13-05&r=pbe |
| By: | Fabio Sánchez Torres; Mónica Pachón |
| Abstract: | The present paper explores the relationship between political competition and effective public goods delivery systems in a decentralized context to study whether the awareness generated through such a competitive environment and the existence of more political options are a part of the causal mechanisms for effective governance. In particular, we want to observe the effect of electoral competition on the incentives to build fiscal capacity and provide public goods such as education and water, that are to a large extent the responsibility of the local municipalities. The research hypothesis is that political competition strengthens the decentralized municipalities through building their local fiscal capacity. In turn, the fiscal capacity is the fundamental variable that explains the differences in sector performance across local governments. Local fiscal capacity brings about better policy outcomes, as well as a better match between resources and the needs - what we call responsiveness - which simultaneously ensures greater efficiency in local spending. Using a rich panel municipal dataset from 1994 till 2009, we have shown that on comparing the differences across education and the water and sewerage sectors, the power of fiscal effort appears to be the driving force behind better policy outcomes than any other resource commonly made available to the municipalities, such as national transfers or royalties. |
| Keywords: | Democracy, Decentralization, fiscal policy, local policy, water, sanitation |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:81418&r=pbe |
| By: | Nathalie Mathieu-Bolh (University of Vermont - University of Vermont); Xavier Pautrel (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272) |
| Abstract: | We build a model that takes into consideration the evolution of health over the life cycle and its consequences on individual optimal choices. In this framework, the effects of environmental taxation are not limited to the traditional negative crowding-out and positive productivity effects. We show that environmental taxation generates new general equilibrium effects ignored by previous contributions. Indeed, as the environmental tax improves the health profile over the life-cycle, it influences saving, labor supply, and retirement. We also show that whether those general equilibrium effects are positive or negative for the economy crucially depends on the degree of substitutability between young and old labor. Our numerical examples suggest that ignoring those new effects may result in large overstatement of the negative effect of an increase in environmental taxation on output, and understatement of the positive effect on welfare. ∗ |
| Keywords: | Health ; environmental policy ; economic growth |
| Date: | 2014–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00990256&r=pbe |
| By: | Philippe Choné (Centre de Recherche en Économie et Statistique); Guy Laroque (Centre de Recherche en Économie et Statistique) |
| Abstract: | This article aims at understanding the interplay between pension schemes and tax instruments. The model features extensive labor supply in a stationary environment with overlapping generations and perfect financial markets. Compared with the reference case of a pure taxation economy, we find that taxes become more redistributive when the pension instrument is available, while pensions provide incentives to work. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpecon:info:hdl:2441/45smbs6p8180bqfu6epmve62q2&r=pbe |
| By: | Christian Baker; Jeremy Bejarano; Richard W. Evans; Kenneth L. Judd; Kerk L. Phillips |
| Abstract: | We characterize and demonstrate a solution method for an optimal commodity (sales) tax problem consisting of multiple goods, heterogeneous agents, and a nonconvex policy maker optimization problem. Our approach allows for more dimensions of heterogeneity than has been previously possible, incorporates potential model uncertainty and policy objective uncertainty, and relaxes some of the assumptions in the previous literature that were necessary to generate a convex optimization problem for the policy maker. Our solution technique involves creating a large database of optimal responses by different individuals for different policy parameters and using "Big Data" techniques to compute policy maker objective values over these individuals. We calibrate our model to the United States and test the effects of a differentiated optimal commodity tax versus a flat tax and the effect of exempting a broad class of goods (services) from commodity taxation. We find that only a potentially small amount of tax revenue is lost for a given societal welfare level by departing from an optimal differentiated sales tax schedule to a uniform flat tax and that there is only a small loss in revenue from exempting a class of goods such as services in the United States. |
| JEL: | C1 H2 H21 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20130&r=pbe |
| By: | Lukas Hakelberg |
| Abstract: | Theories of tax competition predict that small countries competing with large countries benefit, as they find it relatively easy to substitute revenue lost in a tax cut with revenue gained from incoming foreign tax base. If small countries can only lose from tax co-operation, why are Luxembourg and Austria bound to agree to a revised EU Savings Tax Directive that will oblige them to automatically provide information on foreign account holders’ interest income to residence countries? Putting emphasis on the neglected issue of power, I show that Luxembourg and Austria were first coerced into bilateral agreements on automatic exchange of information by the United States, which then activated a most-favored nation clause contained in the EU Directive on Administrative Co-operation in Tax Matters. As a result, the two countries were under a legal obligation to also extend greater co-operation to EU partners. |
| Keywords: | tax competition; tax policy |
| Date: | 2014–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euirsc:p0375&r=pbe |
| By: | Jorge A. Mesones; Jorge R. Peschiera Cassinelli; Jorge F. Baca Campodónico |
| Abstract: | The Peruvian economy has exhibited remarkable growth in the past 20 years. Good tax and monetary policies, along with comprehensive structural adjustment, which has attracted substantial foreign investment, are regarded as the pillars of this success. Notwithstanding the advances experienced on reducing poverty, lowering inequality and unemployment continue to be elusive targets for the Peruvian government and constitute main causes of social unrest. This paper assesses the impact of Peruvian public expenditures in education, health, and infrastructure on economic growth, poverty, and income distribution in the past 20 years using a Dynamic Computable General Equilibrium Model (DCGEM), which is an economy-wide model that describes the behavior of producers and consumers and the linkages among them. |
| Keywords: | Public debt, Economic Development & Growth, Government budget, Public expenditure, Computable general equilibrium models, public expenditures, health, education, infrastructure |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:83956&r=pbe |
| By: | Walid Qazizada (Kingston University); Engelbert Stockhammer (Kingston University) |
| Abstract: | This paper investigates the impact of government spending on output and the size of the spending multiplier during periods of output contraction vs. expansion. It also investigates the impact of spending when the economy hits the nominal zero lower bound. It uses a panel of 21 advanced countries over the period of 1979-2011, applying a TSLS estimation technique. We find a spending multiplier of close to 1 during expansion and values of up to 3 during contractions. However, our results do not indicate a difference in the impact of spending during nominal zero lower bound periods. |
| Keywords: | fiscal multiplier, fiscal policy, panel analysis, output contraction |
| JEL: | E62 C36 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1404&r=pbe |
| By: | Carlos Scartascini; Martín Ardanaz |
| Abstract: | According to an influential theoretical argument, presidential systems tend to present smaller governments because the separation between those who decide the size of the fiscal purse and those who allocate it creates incentives for lower public expenditures. In practice, forms of government vary greatly, and budget institutions -the rules according to which budgets are drafted, approved, and implemented- are one (of many) drivers of such variation. This paper argues that under more hierarchical budget rules, presidential and parliamentary systems generate a similar incentive structure for the executive branch in shaping the size of government. This hypothesis is tested on a broad cross-section of countries, presidentialism is found to have a negative impact on government size only when executive discretion in the budget process is low (that is, in a context of separation of powers). However, the negative effect of presidentialism on expenditures vanishes or is even reversed when the executive`s discretion over the budget process is higher. Hence, budget institutions that impose restrictions on the legislature`s ability to amend budget proposals can make political regimes look more alike in terms of fiscal outcomes. |
| Keywords: | Public Administration & Policy Making, Fiscal Policy, Constitutions, Legislatures, Public finance, IDB-WP-427 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:82147&r=pbe |
| By: | Halkos, George; Paizanos, Epameinondas |
| Abstract: | This paper examines the effect of economic growth and government spending on the environment using a panel of 71 countries for the time period 1970-2008. In particular, we test the hypothesis of the existence of an inverted U-shaped relationship between economic performance and pollution, as well as the hypothesis of a negative direct relationship between fiscal spending and pollution. To take into account that environmental degradation may respond to changes in income and government spending with a time lag, due to technological and institutional reasons, we apply appropriate dynamic econometric methods. We report the estimates for both the short-run and long-run effects on two different air pollutants, namely SO2 and CO2, distinguishing the results for different levels of economic development. Policy implications range depending on the level of income of the considered countries. |
| Keywords: | Government expenditure; economic growth; environment; dynamics. |
| JEL: | E60 H50 Q53 Q54 Q56 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56084&r=pbe |
| By: | Alimi, R. Santos |
| Abstract: | Government size, its roles and the efficiency of the public sector has becomes a more important issue recently especially when the financial crisis has covered severely almost all Economies worldwide. Using time-series techniques, this study empirically tests the validity of existing theory (Barro, 1990; and Armey, 1995) which stipulates there is a nonlinear relationship between government size and economic growth; such that government spending is growth-enhancing at low levels but growth-retarding at high levels, with the optimal size occurring somewhere in between. This study employed three estimation equations. First, for the size of government, two measures are considered as follows: (i) share of total expenditures to gross domestic product, (ii) share of recurrent expenditures to gross domestic product. Second, the study adopted real GDP (without government expenditure component), as a variant measure of economic growth other than the real total GDP, in estimating the optimal level of government expenditure. The study is based on annual Nigeria country-level data for the period 1970 to 2012. Estimation results show that the inverted U-shaped curve exists for the two measures of government size and the estimated optimum shares are 19.81% and 10.98% respectively. Finally, with the adoption of real GDP (without government expenditure component),the optimum government size was found to be 12.58% of GDP. Our analysis shows that the actual share of government spending on average (2000 - 2012) is about 13.4%. This study adds to the literature confirming that the optimal government size exists not only for developed economies, but also for developing economy like Nigeria. Thus a public intervention threshold level that fosters economic growth is a reality; beyond this point economic growth should be left in the hands of the private sector. This finding has a significant implication for the appraisal of government spending and budgetary policy design. |
| Keywords: | Public Expenditure, Economic Growth, Optimum Level, Fully Modified OLS |
| JEL: | C22 E62 H1 H50 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56073&r=pbe |
| By: | Ricco, Giovanni; Callegari, Giovanni; Cimadomo, Jacopo |
| Abstract: | In this paper, we investigate the influence of fiscal policy uncertainty in the propagation of government spending shocks in the US economy. We propose a new index to measure fiscal policy uncertainty which relies on the dispersion of government spending forecasts as presented in the Survey of Professional Forecasters (SPF). This new index is solely focused on the uncertainty surrounding federal spending and is immune from the influence of general macroeconomic uncertainty by as much as is possible. Our results indicate that, in times of elevated fiscal policy uncertainty, the output response to policy announcements about future government spending growth is muted. Instead, periods of low policy uncertainty are characterised by a positive and persistent output response to fiscal announcements. Our analysis also shows that the stronger effects of fiscal policy in less uncertain times is mainly the result of agents’ tendency to increase investment decisions in these periods, in line with the prediction of the option value theory in Bernanke (1983). |
| Keywords: | Fiscal policy uncertainty, Government spending shock, Fiscal transmission mechanism. |
| JEL: | D80 E60 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56136&r=pbe |
| By: | Amani Elnasri (School of Economics, Australian School of Business, the University of New South Wales) |
| Abstract: | This paper presents new evidence on the impact of public infrastructure on the Australian economy. The contribution of the paper is three-fold. First, it estimates measures of multifactor productivity for each of the states and territories. Second, it employs a new data set on public infrastructure. Third, the paper applies detailed econometric investigations in an attempt to readdress the crucial econometric shortcomings of earlier studies. The analysis presented here is designed to investigate two widely-debated questions. First, whether aggregate time-series analysis is incapable of capturing infrastructure spillovers to productivity and, consequently, results in incredibly high estimates of infrastructure elasticity. Second, whether state-specific characteristics exhibit a significant role in explaining effects on productivity. To answer the first question, the study applies time-series regressions on both a national and state-by-state basis. Results from this approach confirm the implausibly large effect of infrastructure for the whole economy and four states. To examine the second issue, the paper develops a panel cointegration model which controls for state fixed effects. In sharp contrast with findings from aggregate time-series, results from the fixed effects approach are more plausible and robust to sensitivity tests. In another piece of evidence, estimation of an error-correction model reveals that a long-run identification and modelling of the relationship (i.e. a cointegration) re ects the important positive role of infrastructure on productivity. However, short-run dynamics provide no support for a positive effect which explains why earlier studies which employed differenced data found infrastructure has no discernible effect on productivity. In addition, applying a causality test suggests a long-run unidirectional causality running from public infrastructure to productivity. |
| Keywords: | Productivity, Public Infrastructure, Cointegration, Disaggregated analysis |
| JEL: | H54 O47 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2014-23&r=pbe |
| By: | Mascquarie, Port; Gruen, Nicholas |
| Keywords: | Public Economics, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare14:165840&r=pbe |
| By: | Fabiana Machado |
| Abstract: | Decentralization of provision of public services has been an important item in the agenda of developing countries. While some scholars and practitioners argue that decentralization is associated with improvements in provision due to higher accountability, others note its potential pitfalls. In particular, decentralization to local communities characterized by poverty, low levels of education, and inequality may lead to low accountability and higher susceptibility to political capture. This paper explores these dynamics empirically, taking advantage of the fact that in Brazilian municipalities primary education is provided by schools under municipal as well as under state management. The performance of these two types of school in the same municipalities is compared in terms of their levels of inputs and the efficiency of service delivery using non-parametric data envelopment analysis (DEA). The results suggest that there are indeed drawbacks to decentralization in municipalities where inequality is higher and education and political participation are lower. |
| Keywords: | Public Administration & Policy Making, Education, Decentralization, IDB-WP-397, Decentralization, Public Education, Accountability |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:82161&r=pbe |
| By: | Shimasawa, Manabu; Oguro, Kazumasa; Masujima, Minoru |
| Abstract: | We employed the Generational Accounting model in estimating the generation-specific lifetime (both past and the future) benefits/burdens and income and evaluating their values as of 2010, thus estimating the lifetime net burden ratio (= lifetime net burden/lifetime income). As a result, the following points were elucidated: 1) Among the current living generations, the lifetime net burden ratio of the 0-year-old generation is about 25 percentage points higher than that of the current 90-year-old generation; 2) The lifetime net burden ratio of the future generations is about 31 percentage points higher than that of the 0-year-old generation; 3) The net burden of the current generations would have to be increased in order to narrow the generational gap between the current generations and the future generations, which would inevitably lead to an expansion of the intragenerational gap of the current generations; and 4) In order to prevent conflict of interest between the current generations, in particular the younger generations and future generations, and at the same time, narrow the intergenerational gap, it is desirable to increase the income of the current generations, in particular that of the younger generations, by achieving a high economic growth rate and implementing macroeconomic policy management that would inhibit increase in the risk premium included in the interest rate. |
| Keywords: | Generational Accounting, falling birthrates and aging population, fiscal sustainability, government debt |
| JEL: | H61 E62 B41 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cisdps:625&r=pbe |