A Case Where Barro Expectations are Not Rational
Copyright policy )A Case Where Barro Expectations are Not Rational
This note generalizes Feldstein’s (1976) criticism of Barro’s(1974) analysis for the case that the interest rate exceeds the growth rate. This is done by considering an economy in steady state where all agents hold "Barro expectations": they believe that government debt must necessarily be repaid and therefore leave the present value of their income streams unchanged. In this scenario, a change in the mode of taxation affects the present value of disposable income in the private sector. This violates their Barro expectations.
Steuerpolitik, 330, Steuerwirkung, Social Sciences, Barro-Ricardo equivalence, H, E2, Ricardian equivalence, E12, debt, HB71-74, E6, Zins, Barro-Ricardo equivalence, Ricardian equivalence, fiscal policy, debt, taxation, rational expectations, ddc:330, Barro-Ricardo equivalence,Ricardian equivalence,fiscal policy,debt,taxation,rational expectations, Barro-Ricardo equivalence; Ricardian equivalence; fiscal policy; debt; taxation; rational expectations, Öffentliche Anleihe, 300, Ricardianische Äquivalenz, Ricardianisches Äquivalenztheorem, H6, Economics as a science, rational expectations, Rationale Erwartung, Erwartungstheorie, taxation, fiscal policy, Theorie, jel: jel:E2, jel: jel:E6, jel: jel:E12, jel: jel:H6
Steuerpolitik, 330, Steuerwirkung, Social Sciences, Barro-Ricardo equivalence, H, E2, Ricardian equivalence, E12, debt, HB71-74, E6, Zins, Barro-Ricardo equivalence, Ricardian equivalence, fiscal policy, debt, taxation, rational expectations, ddc:330, Barro-Ricardo equivalence,Ricardian equivalence,fiscal policy,debt,taxation,rational expectations, Barro-Ricardo equivalence; Ricardian equivalence; fiscal policy; debt; taxation; rational expectations, Öffentliche Anleihe, 300, Ricardianische Äquivalenz, Ricardianisches Äquivalenztheorem, H6, Economics as a science, rational expectations, Rationale Erwartung, Erwartungstheorie, taxation, fiscal policy, Theorie, jel: jel:E2, jel: jel:E6, jel: jel:E12, jel: jel:H6
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