Why do governments end up with debt ? Short-run effects matter

Desbonnet, Audrey; Weitzenblum, Thomas

dc.contributor.author	Desbonnet, Audrey
dc.contributor.author	Weitzenblum, Thomas
dc.date.accessioned	2012-01-27T10:52:37Z
dc.date.available	2012-01-27T10:52:37Z
dc.date.issued	2012
dc.identifier.issn	0095-2583
dc.identifier.uri	https://basepub.dauphine.fr/handle/123456789/7991
dc.language.iso	en	en
dc.subject	Public debt
dc.subject	Government Policy
dc.subject.ddc	339	en
dc.subject.classificationjel	E.E6.E60	en
dc.subject.classificationjel	H.H6.H60	en
dc.title	Why do governments end up with debt ? Short-run effects matter
dc.type	Article accepté pour publication ou publié
dc.contributor.editoruniversityother	University of Lille 2;France
dc.description.abstracten	This paper reconsiders the impact of public debt in an economy with heterogeneous households and incomplete markets to emphasize the short-run effects of an increase in public debt. As compared to models that rest on steady-state analysis, we show that the welfare gains of a public debt increase are substantially higher when transitional dynamics are accounted for. The additional debt issue allows for a temporary reduction in the income tax rate, which stimulates labor supply and generates an overshooting of the interest rate. The short-run gains create a temptation to deviate toward higher levels of debt. Debt increases continue to generate welfare gains even when debt is considerably higher than its long-run optimal level.
dc.relation.isversionofjnlname	Economic Inquiry
dc.relation.isversionofjnlvol	50
dc.relation.isversionofjnlissue	4
dc.relation.isversionofjnldate	2012
dc.relation.isversionofjnlpages	905-919
dc.relation.isversionofdoi	http://dx.doi.org/10.1111/j.1465-7295.2011.00410.x
dc.description.sponsorshipprivate	oui	en
dc.relation.isversionofjnlpublisher	Wiley
dc.subject.ddclabel	Macroéconomie	en
dc.description.ssrncandidate	non
dc.description.halcandidate	oui
dc.description.readership	recherche
dc.description.audience	International
dc.relation.Isversionofjnlpeerreviewed	oui
dc.date.updated	2018-03-20T10:43:05Z
hal.identifier	hal-01518357	*
hal.version	1	*
hal.update.action	updateMetadata	*
hal.update.action	updateFiles	*

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