Limited asset market participation and fiscal sustainability

Maebayashi, Noritaka; Tanaka, Jumpei

doi:10.1007/s00712-022-00776-w

Cited by 7 publications

(7 citation statements)

References 37 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…I introduce money demand or money holding and bequest by consumers into a simple endogenous growth model with an overlapping generation's structure. Mainly, I refer to Maebayashi and J. Tanaka (2021) about the formulation of the overlapping generations endogenous growth model. The model is its simplified version, adding money holding and bequests by consumers.…”

Section: Consumers' Behaviormentioning

confidence: 99%

See 1 more Smart Citation

The budget deficit in an endogenous growth model with bequest and money holdings

Tanaka

2023

EAL

View full text Add to dashboard Cite

By an endogenous growth model with a two-period overlapping generations structure, I examine the existence of a budget deficit in an economy that endogenously grows by investments of firms. The consumers leave bequests to their descendants and hold money as a part of their savings. I use a Barro-type utility function, where people include the utility of their children in their own utility. The main results are as follows. 1) A budget deficit is necessary for full employment under constant prices. 2) Inflation is induced if the actual budget deficit is greater than the value at which full employment is achieved under constant prices. 3) If the actual budget deficit is smaller than the value which is necessary and sufficient for full employment under constant prices, a recession occurs. Therefore, a balanced budget cannot achieve full employment under constant prices. I do not assume that the budget deficit must later be made up by a budget surplus. I use a Barro-type utility function to prove the necessity (or inevitability) of a budget deficit instead of the neutrality of government debt. In the appendix of this paper, I show that if money, as well as goods, are produced by capital and labor, a budget deficit is not necessary for full employment under constant prices.

show abstract

Section: Consumers' Behaviormentioning

confidence: 99%

“…Also, I use an endogenous growth model with a two-period overlapping generations structure, money holding, and bequests of consumers. About the model, I refer to Grossman andYanagawa (1993) and, mainly, Maebayashi andJ. Tanaka(2021), but my model is a simplified version adding money holding of consumers 1 .…”

Section: Introductionmentioning

confidence: 99%

The budget deficit in an endogenous growth model with bequest and money holdings

Tanaka

2023

EAL

View full text Add to dashboard Cite

show abstract

“…We introduce money demand or money holding of consumers into a simple endogenous growth model with overlapping generations structure. Mainly, we refer to Maebayashi and Tanaka (2021) about formulation of the overlapping generations endogenous growth model. Our model is its simplified version adding money holding of consumers.…”

Section: Budget Deficit In Monetary Economymentioning

confidence: 99%

“…Among others the AK-type endogenous growth model is one of the most simple and representative model. In this paper by an AK-type endogenous growth model with two-period overlapping generations structure and money holding of consumers, we examine the existence of budget deficit (fiscal deficit) in an economy which endogenously grows by investments of firms (specifically about a model we refer to Grossman and Yanagawa (1993) and, in particular, Maebayashi and Tanaka (2021), but our model is a simplified version adding money holding of consumers).…”

Section: Introductionmentioning

confidence: 99%

“…However, these authors, and most of the others, do not take into account money holdings by people. Of course, neither Diamond (1965) nor Maebayashi and Tanaka (2021) take into account people's money holdings. Critical to the conclusions of this paper is that we are considering a growing economy and that we are taking into account people's money holdings.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Monetary economy and budget deficit in endogenous growth model

Tanaka

2023

International Studies of Economics

View full text Add to dashboard Cite

By an endogenous growth model with two‐period overlapping generations structure and money holding of consumers, we examine the existence of budget deficit in an economy which endogenously grows by investments of firms. The main results are as follows. (1) Budget deficit is necessary for full employment under constant prices. (2) Inflation is induced if the actual budget deficit is greater than the value at which full employment is achieved under constant prices. (3) If the actual budget deficit is smaller than the value which is necessary and sufficient for full employment under constant prices, a recession occurs. Therefore, balanced budget cannot achieve full employment under constant prices. We do not assume that budget deficit must later be made up by budget surplus. This paper is an example of an analysis using a very simple model of the following statement by John Maynard Keynes.“Unemployment develops, that is to say, because people want the moon;—men cannot be employed when the object of desire (i.e. money) is something which cannot be produced and the demand for which cannot be readily choked off. There is no remedy but to persuade the public that green cheese is practically the same thing and to have a green cheese factory (i.e. a central bank) under public control.”In the appendix of this paper, we show that if money as well as goods are produced by capital and labor, budget deficit is not necessary for full employment under constant prices.

show abstract

Correction to: Limited asset market participation and fiscal sustainability

Maebayashi

Tanaka

2022

J Econ

View full text Add to dashboard Cite

Limited asset market participation and fiscal sustainability

Cited by 7 publications

References 37 publications

The budget deficit in an endogenous growth model with bequest and money holdings

The budget deficit in an endogenous growth model with bequest and money holdings

Monetary economy and budget deficit in endogenous growth model

Correction to: Limited asset market participation and fiscal sustainability

Contact Info

Product

Resources

About