Arbeitspapier
The Burden of Unanticipated Government Spending
We study the impact of a government spending shock on the distribution of income and wealth between cohorts in a dynamic stochastic Overlapping Generations model with two types of households, Ricardian households and rule-of-thumb consumers. We demonstrate that an unexpected increase in government spending increases income inequality and decreases wealth inequality. In contrast to the conventional wisdom that the financing of additional expenditures by debt rather than taxes especially burdens young generations, we find that a debt-financed increase in government spending also harms Ricardian households during retirement, while workers close to retirement benefit. The crucial element in our analysis is a wealth effect that results from the decline in the price of capital due to higher government debt.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 5876
- Klassifikation
-
Wirtschaft
Fiscal Policy
Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
General Aggregative Models: Keynes; Keynesian; Post-Keynesian
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Personal Income, Wealth, and Their Distributions
- Thema
-
fiscal policy
debt financing
income and wealth distribution
rule-of-thumb consumers
Ricardian households
overlapping generations
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Heer, Burkhard
Scharrer, Christian
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2016
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Heer, Burkhard
- Scharrer, Christian
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2016
Ähnliche Objekte (12)
Government Spending and the Taylor Principle
Government Spending and Durable Goods
Constitutional Determinants of Government Spending
Optimal Government Spending and Unemployment
Does anticipation of government spending matter? The role of (non-)defense spending
The effects of government spending in the Eurozone
The impact of weather on local government spending
Understanding the effects of government spending on consumption
Natural Disasters, Government Spending, and the Fiscal Multiplier
The long and short of financing government spending
Understanding the effects of government spending on consumption
Government spending volatility and the size of nations
Government Spending and the Taylor Principle
Government Spending and Durable Goods
Constitutional Determinants of Government Spending
Optimal Government Spending and Unemployment
Does anticipation of government spending matter? The role of (non-)defense spending
The effects of government spending in the Eurozone
The impact of weather on local government spending
Understanding the effects of government spending on consumption
Natural Disasters, Government Spending, and the Fiscal Multiplier
The long and short of financing government spending
Understanding the effects of government spending on consumption
Government spending volatility and the size of nations
Government Spending and the Taylor Principle
Government Spending and Durable Goods
Constitutional Determinants of Government Spending
Optimal Government Spending and Unemployment
Does anticipation of government spending matter? The role of (non-)defense spending
The effects of government spending in the Eurozone
The impact of weather on local government spending
Understanding the effects of government spending on consumption
Natural Disasters, Government Spending, and the Fiscal Multiplier
The long and short of financing government spending
Understanding the effects of government spending on consumption