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Finite Horizons, Intertemporal Substitution, and Fiscal Policy

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  • David Alan Aschauer

    (Federal Reserve Bank of Chicago)

Abstract

This article synthesizes two strands of current macroeconomic research in fiscal policy by allowing for finite lifetimes in an intertemporal substitution model. Among other things, the article establishes that in such a model, public debt issuance is contractionary with respect to current output, a conclusion in strong contrast with conventional macroeconomic analysis.

Suggested Citation

  • David Alan Aschauer, 1990. "Finite Horizons, Intertemporal Substitution, and Fiscal Policy," Public Finance Review, , vol. 18(1), pages 77-91, January.
    • Handle: RePEc:sae:pubfin:v:18:y:1990:i:1:p:77-91
    DOI: 10.1177/109114219001800105
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    References listed on IDEAS

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    1. Jacob A. Frenkel & Assaf Razin, 1986. "Fiscal Policies and Real Exchange Rates in the World Economy," NBER Working Papers 2065, National Bureau of Economic Research, Inc.
    2. Mankiw, N Gregory & Summers, Lawrence H, 1986. "Money Demand and the Effects of Fiscal Policies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(4), pages 415-429, November.
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    6. Frenkel, Jacob A & Razin, Assaf, 1986. "Fiscal Policies in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 564-594, June.
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    8. Barro, Robert J., 1976. "Rational expectations and the role of monetary policy," Journal of Monetary Economics, Elsevier, vol. 2(1), pages 1-32, January.
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    10. Evans, Paul, 1985. "Do Large Deficits Produce High Interest Rates?," American Economic Review, American Economic Association, vol. 75(1), pages 68-87, March.
    11. Mascaro, Angelo & Meltzer, Allan H., 1983. "Long- and short-term interest rates in a risky world," Journal of Monetary Economics, Elsevier, vol. 12(4), pages 485-518, November.
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