IDEAS home Printed from https://ideas.repec.org/p/dpr/wpaper/0791.html
   My bibliography  Save this paper

Public Debt Places No Burden on Future Generations under Demand Shortage

Author

Listed:
  • Takayuki Ogawa
  • Yoshiyasu Ono

Abstract

In a Diamond-type overlapping-generations setting public debt issuanceplaces no burden on future generations including those who repay the debt if prices and wages are fixed and unemployment occurs in the periods in which public bonds are issued and repaid. Whether the collected fund is spent on government purchases or transfers to the present generation, public bond issuance stimulates aggregate demand and creates additional employment of future generations, which yields additional income that is large enough to cover their tax burden. This property is true whether the debt is repaid by children or grandchildren.

Suggested Citation

  • Takayuki Ogawa & Yoshiyasu Ono, 2010. "Public Debt Places No Burden on Future Generations under Demand Shortage," ISER Discussion Paper 0791, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:0791
    as

    Download full text from publisher

    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2010/DP0791.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gilles Saint-Paul, 1992. "Fiscal Policy in an Endogenous Growth Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1243-1259.
    2. Lopez-Garcia, Miguel-Angel, 2008. "On the role of public debt in an OLG model with endogenous labor supply," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1323-1328, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Debi Prasad Bal & Badri Narayan Rath, 2016. "Is Public Debt a Burden for India?," Economic Papers, The Economic Society of Australia, vol. 35(2), pages 184-201, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Altin Hoti & Aranit Shkurti & Scheherazade Rehman, 2022. "Impact of External Debt on Economic Growth in Western Balkan Countries," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 11, March.
    2. Yang Zaigui, 2005. "Pay-As-You-Go Public Pension Systems: Two-sided Altruism and Endogenous Growth," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 1(1), pages 1-13, June.
    3. van Groezen, B.J.A.M. & Meijdam, A.C. & Verbon, H.A.A., 2002. "Social Security Reform and Population Ageing in a Two-Sector Growth Model," Discussion Paper 2002-25, Tilburg University, Center for Economic Research.
    4. Takayuki Ogawa, 2004. "Welfare Analysis of Debt Policy during Recessions," Discussion Papers in Economics and Business 04-14, Osaka University, Graduate School of Economics.
    5. Kizuku Takao, 2014. "Growth effect of bubbles in a non-scale endogenous growth model with in-house R&D," Discussion Papers in Economics and Business 14-11, Osaka University, Graduate School of Economics.
    6. Alberto Martin & Jaume Ventura, 2011. "Theoretical Notes on Bubbles and the Current Crisis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(1), pages 6-40, April.
    7. Asit Mohanty & Suresh Kumar Patra & Satyendra Kumar & Avipsa Mohanty, 2016. "An Empirical Analysis of Effect of Public Debt on Economic Growth in India in the Post-Reform Era," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(11), pages 692-705, November.
    8. Rebeca Jimenez-Rodriguez & Araceli Rodríguez-López, 2015. "What happens to the relationship between public debt and economic growth in European countries?," Economics and Business Letters, Oviedo University Press, vol. 4(4), pages 151-160.
    9. Mitze, Timo & Matz, Florian, 2015. "Public debt and growth in German federal states: What can Europe learn?," Journal of Policy Modeling, Elsevier, vol. 37(2), pages 208-228.
    10. Michael Bräuninger, 2005. "Social Security, Unemployment, and Growth," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 423-434, August.
    11. repec:spo:wpmain:info:hdl:2441/9644 is not listed on IDEAS
    12. Jaejoon Woo & Manmohan S. Kumar, 2015. "Public Debt and Growth," Economica, London School of Economics and Political Science, vol. 82(328), pages 705-739, October.
    13. Saint-Paul, Gilles, 1997. "The role of rents to human capital in economic development," Journal of Development Economics, Elsevier, vol. 53(2), pages 229-249, August.
    14. Yasushi Iwamoto & Akihisa Shibata, 2008. "International and Intergenerational Aspects of Capital Income Taxation in an Endogenously Growing World Economy," Review of International Economics, Wiley Blackwell, vol. 16(2), pages 383-399, May.
    15. Alberto Martin & Jaume Ventura, 2012. "Economic Growth with Bubbles," American Economic Review, American Economic Association, vol. 102(6), pages 3033-3058, October.
    16. Yifei Cai, 2017. "Nonlinear Analysis of Economic Growth, Public Debt and Policy Tools," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 7(1), pages 99-108, January.
    17. Alexander Chudik & M. Hashem Pesaran & Kamiar Mohaddes, 2020. "Identifying Global and National Output and Fiscal Policy Shocks Using a GVAR," Advances in Econometrics, in: Essays in Honor of Cheng Hsiao, volume 41, pages 143-189, Emerald Group Publishing Limited.
    18. De Vita, Glauco & Trachanas, Emmanouil & Luo, Yun, 2018. "Revisiting the bi-directional causality between debt and growth: Evidence from linear and nonlinear tests," Journal of International Money and Finance, Elsevier, vol. 83(C), pages 55-74.
    19. Mehrotra, Aaron N. & Peltonen, Tuomas A., 2005. "Socio-economic development and fiscal policy: lessons from the cohesion countries for the new member states," Working Paper Series 467, European Central Bank.
    20. Andersen, Torben M. & Bhattacharya, Joydeep, 2013. "Unfunded Pensions And Endogenous Labor Supply," Macroeconomic Dynamics, Cambridge University Press, vol. 17(5), pages 971-997, July.
    21. Luigi Mittone & Matteo Tomaselli, 2019. "Economic Growth and Public Debt: An Experimental Approach in Search of a Confidence Channel," DEM Working Papers 2019/18, Department of Economics and Management.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dpr:wpaper:0791. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Librarian (email available below). General contact details of provider: https://edirc.repec.org/data/isosujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.