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Government Deficits and Aggregate Demand

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  • Martin Feldstein

Abstract

The evidence presented in this paper indicates that changes in government spending, transfers and taxes can have substantial effects on aggregate demand. The estimates also indicate that the promise of future social security benefits significantly reduces private saving. Each of the basic implications of the so-called "Ricardian equivalence theorem" is contradicted by the data. The results are consistent with the more general view of the effects of fiscal actions and fiscal expectations that is described in the paper.

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  • Martin Feldstein, 1980. "Government Deficits and Aggregate Demand," NBER Working Papers 0435, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0435
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    1. Willem H. Buiter & James Tobin, 1978. "Debt Neutrality: A Brief Review of Doctrine and Evidence," Cowles Foundation Discussion Papers 497, Cowles Foundation for Research in Economics, Yale University.
    2. Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 3-27, April.
    3. Miller, Merton H. & Upton, Charles W., 1986. "Macroeconomics," University of Chicago Press Economics Books, University of Chicago Press, number 9780226526232, December.
    4. Feldstein, Martin S., 1973. "Tax incentives, corporate saving, and capital accumulation in the United States," Journal of Public Economics, Elsevier, vol. 2(2), pages 159-171, April.
    5. Michael J. Boskin, 1978. "Taxation, Saving, and the Rate of Interest," NBER Chapters, in: Research in Taxation, pages 3-27, National Bureau of Economic Research, Inc.
    6. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
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