Are Government Bonds Net Wealth?

Barro, Robert J.

doi:10.1086/260266

Cited by 4,489 publications

(2,543 citation statements)

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“…According to Barro (1974), to the extent individuals are ensconced in multigenerational family structures and voluntarily make altruistic transfers within their families, debt is a tax bill that must be paid later. Appropriately discounted, debt and taxation are the same thing, and people with rational expectations should regard them as such-a statement that has come to be known as the Ricardian equivalence theorem.…”

Section: Underfunding Public Employee Pension Funds: How Did We Get Hmentioning

confidence: 99%

The Day After Tomorrow: The Politics of Public Employee Benefits

Kiewiet¹

2010

CJPP

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The Pew Center estimates that as of July 2008, state and local governments in the United States had promised current and future retirees $3.34 trillion in benefits but had only $2.35 trillion of projected assets to pay for them. The investment losses that public employee pension funds experienced during the market downturn of 2008-09 made the trillion dollar gap much larger. In this paper I discuss how the pension funding gap has developed, compare the situation in California with that of other states, and discuss the ways in which the state government and local governments in California are responding to the increasing strains pension obligations place on their finances. I recommend that the constitution of California be amended to forbid the state and all local governments from ever again issuing pension obligation bonds, and to forbid the state of California, as well as all local governments within the state, from ever again offering their employees defined benefit pension plans.

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Section: Underfunding Public Employee Pension Funds: How Did We Get Hmentioning

confidence: 99%

The Day After Tomorrow: The Politics of Public Employee Benefits

Kiewiet¹

2010

CJPP

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“…7 As analyzed in Barro (1974), if the current generation chooses to bequeath a legacy to future generations due to altruistic motives, the Ricardian equivalence holds and an issue of public debt has no effect.…”

Section: Policy 1 Public Debt Is Fully Redeemed By Taxing On the Oldmentioning

confidence: 99%

Public Debt Places No Burden on Future Generations under Demand Shortage

Ogawa

Ono

2010

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractIn a Diamond-type overlapping-generations setting public debt issuance places 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.

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“…Hence a capital income tax (on the normal return) may be seen as a selective commodity tax on future consumption. As argued by Chamley (1986) and Judd (1985), in the long run such a tax seems very hard to defend in an economy where consumers behave as if they have an infinite time horizon, say, because generations are linked through altruistic bequests in the manner described by Barro (1974). To see why, note that from the standpoint of period zero, the relative price of consumption in some future period T (i.e., the amount by which consumption in period 0 must be cut in order to increase consumption in period T by one unit) is…”

Section: Should the Normal Return To Capital Be Taxed?mentioning

confidence: 99%