scholarly journals Spend-and-Tax Adjustments and the Sustainability of the Government's Intertemporal Budget Constraint

2010 ◽  
Author(s):  
Gabriella Deborah Legrenzi ◽  
Costas Milas
Keyword(s):  
Budget Constraint ◽  
Intertemporal Budget Constraint

scholarly journals DYNAMIC LAFFER CURVES AND POPULATION GROWTH

2021 ◽  
Author(s):  
Shumaila Waqas
Keyword(s):  
Growth Rate ◽  
Population Growth ◽  
Dynamic Effect ◽  
Budget Constraint ◽  
The Other ◽  
Tax Revenue ◽  
Tax Base ◽  
Intertemporal Budget Constraint ◽  
Other Hand ◽  
Opposing Effects

This paper extends the model of Ireland (1994) by incorporating population growth in examining the dynamic effects of a tax cut on the government’s intertemporal budget constraint. A tax cut has two opposing effects. First, it increases the growth rate of the economy and, thus, increases the size of the tax base and tax revenues in the future. On the other hand, a reduction in the tax rate leads to a decrease in revenues in the short run. A dynamic Laffer curve effect arises if a decrease in tax revenue can be counter-balanced by a future increase in tax revenue to ensure that the government’s intertemporal budget constraint is not violated. Similarly, population growth has two opposing effects. A high population growth decreases the per capita growth rate of the economy. On the other hand, a larger population represents a larger tax base and, therefore, makes it easier for a government to finance a budget deficit. Relative to the simulation results in Ireland (1994), our simulations indicate that incorporating population growth into his model implies that the dynamic effect of a given tax cut worsens the government’s long-run fiscal outlook.

The Intertemporal Budget Constraint and the Demand for Credit

1994 ◽  
pp. 67-84
Author(s):  
Robert Barro ◽  
Vittorio Grilli
Keyword(s):  
Budget Constraint ◽  
Intertemporal Budget Constraint

The Intertemporal Budget Constraint and the Sustainability of Budget Deficits

2009 ◽  
pp. 95-111 ◽  
Author(s):  
Philip Arestis ◽  
Malcolm Sawyer
Keyword(s):  
Budget Constraint ◽  
Budget Deficits ◽  
Intertemporal Budget Constraint

Some tests of the government's intertemporal budget constraint using US data

1992 ◽  
Vol 24 (12) ◽  
pp. 1287-1292 ◽  
Author(s):  
Ronald Macdonald
Keyword(s):  
Budget Constraint ◽  
Intertemporal Budget Constraint

Intertemporal budget constraint and public debt sustainability: the case of Italy

1993 ◽  
Vol 25 (2) ◽  
pp. 275-283 ◽  
Author(s):  
Angelo Baglioni ◽  
Umberto Cherubini
Keyword(s):  
Public Debt ◽  
Budget Constraint ◽  
Debt Sustainability ◽  
Intertemporal Budget Constraint

scholarly journals Fiscal Stability of High-Debt Nations under Volatile Economic Conditions

2014 ◽  
Vol 15 (1) ◽  
pp. 4-22 ◽  
Author(s):  
Robert E. Hall
Keyword(s):  
Fiscal Policy ◽  
The United States ◽  
Budget Constraint ◽  
Economic Conditions ◽  
Implicit Assumption ◽  
Ergodic Distribution ◽  
Intertemporal Budget Constraint ◽  
Us Government ◽  
Government Deficit ◽  
The Government

Abstract Using a recursive empirical model of the real interest rate, GDP growth and the primary government deficit in the United States, I solve for the ergodic distribution of the debt/GDP ratio. If such a distribution exists, the government is satisfying its intertemporal budget constraint. One key finding is that historical fiscal policy would bring the current high-debt ratio back to its normal level of 0.35 over the coming decade. Forecasts of continuing increases in the ratio over the decade make the implicit assumption that fiscal policy has shifted dramatically. In the variant of the model that matches the forecast, the government would not satisfy its intertemporal budget constraint if the policy was permanent. The willingness of investors to hold US government debt implies a belief that the high-deficit policy is transitory.

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