On the demographic realism of the Ricardian theory of public finance

TY - JOUR

T1 - On the demographic realism of the Ricardian theory of public finance

AU - van Dalen, Hendrik P.

N1 - Copyright: Copyright 2007 Elsevier B.V., All rights reserved.

PY - 1992/6

Y1 - 1992/6

N2 - The possibility of public debt-neutrality is discussed for countries experiencing demographic changes. The heterogeneity of agents plays a decisive role in destroying Ricardian equivalence of public finance. In addition to the usual explanatory factors of non-neutrality, such as distortionary taxation, public debt is not equivalent to current taxation as a consequence of (1) disconnected dynasties, (2) uncertain lifetimes, (3) diverging birth rates, (4) international migration, (5) population growth uncertainty, (6) diverging rates of time preference, and (7) capital market imperfections. The paper concludes that the pure Ricardian model of public finance serves a purpose as a standard of argument for the more realistic models of public finance.

AB - The possibility of public debt-neutrality is discussed for countries experiencing demographic changes. The heterogeneity of agents plays a decisive role in destroying Ricardian equivalence of public finance. In addition to the usual explanatory factors of non-neutrality, such as distortionary taxation, public debt is not equivalent to current taxation as a consequence of (1) disconnected dynasties, (2) uncertain lifetimes, (3) diverging birth rates, (4) international migration, (5) population growth uncertainty, (6) diverging rates of time preference, and (7) capital market imperfections. The paper concludes that the pure Ricardian model of public finance serves a purpose as a standard of argument for the more realistic models of public finance.

UR - http://www.scopus.com/inward/record.url?scp=27144556324&partnerID=8YFLogxK

U2 - 10.1007/BF01460371

DO - 10.1007/BF01460371

M3 - Article

AN - SCOPUS:27144556324

VL - 140

SP - 204

EP - 232

JO - De Economist

JF - De Economist

SN - 0013-063X

IS - 2

ER -