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Death, Population Growth, Productivity Growth and Debt Neutrality

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  • Willem H. Buiter

Abstract

Debt neutrality is said to occur if, given a program for public spending on current goods and services over time, the real equilibrium of the economy (private consumption, investment, relative prices, etc.) is independent of the pattern of government borrowing and lump-sum taxation over time. The paper brings together work of Blanchard on individual uncertain lifetimes and debt neutrality and Weil on population growth and debt neutrality. It is shown that there will be debt neutrality if and only if the sum of the rate of growth of population and the individual probability of death equals zero. If this condition holds, non-zero rates of growth of labor productivity will not destroy debt neutrality.

Suggested Citation

  • Willem H. Buiter, 1986. "Death, Population Growth, Productivity Growth and Debt Neutrality," NBER Working Papers 2027, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2027
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    References listed on IDEAS

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    1. Menahem E. Yaari, 1965. "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(2), pages 137-150.
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    Cited by:

    1. van de Klundert, Theo, 1993. "Crowding out of private and public capital accumulation in an international context," Economic Modelling, Elsevier, vol. 10(3), pages 273-284, July.
    2. Hippolyte d’Albis, 2003. "La croissance démographique dans les modèles à générations imbriquées," Revue économique, Presses de Sciences-Po, vol. 54(3), pages 573-582.
    3. Augeraud-Véron, Emmanuelle & D'Albis, Hippolyte, 2009. "Continuous-Time Overlapping Generations Models," TSE Working Papers 09-047, Toulouse School of Economics (TSE).
    4. d'Albis, Hippolyte, 2007. "Demographic structure and capital accumulation," Journal of Economic Theory, Elsevier, vol. 132(1), pages 411-434, January.

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