On the Needed Quantity of Government Debt

@inproceedings{Birkeland2006OnTN,
  title={On the Needed Quantity of Government Debt},
  author={Kathryn Birkeland and Edward C. Prescott},
  year={2006}
}
People are enjoying longer retirement periods, and population growth is slowing and, in some countries, falling. In this article, we determine the implications of these demographic changes for the needed amount of government debt. If tax rates and the transfer share of gross national income (GNI) are both high, the needed debt is near zero. With such a system, however, huge deadweight losses are incurred as a result of the high tax rate on labor income. With a savings system, a large government… CONTINUE READING

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