Debt Neutrality

  • Toshihiro Ihori
  • Hiroki Kondo
Chapter
Part of the Research Monographs in Japan-U.S. Business & Economics book series (JUSB, volume 7)

Abstract

The macroeconomic effect of government debt can be analyzed in several ways. Among others, it is important to investigate the plausibility of debt neutrality in the Japanese economy. There are two types of debt neutrality, Ricardian neutrality and Barro’s neutrality. It is useful to distinguish the two neutrality propositions for evaluating the efficacy of fiscal policy; the weak version and the strong version. We have the following proposition as Ricardian neutrality, which is the weak version of debt neutrality

Keywords

Fiscal Policy Labor Income Government Debt Japanese Economy Government Deficit 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Auerbach, A., and L. Kotlikoff, 1987, Dynamic Fiscal Policy, Cambridge: Cambridge University Press.Google Scholar
  2. Barro, R.J., 1974, Are government bonds net wealth? Journal of Political Economy 82, 1095–1117.CrossRefGoogle Scholar
  3. Bernheim, B.D. and K. Bagwell, 1987, Is everything neutral? Journal of Political Economy 96, 308–338.CrossRefGoogle Scholar
  4. Blanchard, O. J., 1985, Debt, deficits and finite horizons, Journal of Political Economy 93, 223–247.CrossRefGoogle Scholar
  5. Buiter, W.H. and K.M. Kletzer, 1992, Government solvency, Ponzi finance and the redundancy and usefulness of public debt, NBER Working Paper #4076.Google Scholar
  6. Campbell, J. Y., 1987, Does saving anticipate declining labor income? An alternative test of the permanent income hypothesis, Econometrica 55, 1249–1273.CrossRefGoogle Scholar
  7. Diamond, P.A., 1965, National debt in a neoclassical growth model, American Economic Review 55, 1126–1150.Google Scholar
  8. Fehr, H., and L.K. Kotlikoff, 1995, Generational accounting in general equilibrium, NBER Working paper #5090.Google Scholar
  9. Hall, R. E., 1978, Stochastic implications of the life cycle permanent income hypothesis: Theory and evidence, Journal of Political Economy 86, 971–987.CrossRefGoogle Scholar
  10. Haug, A. A., 1990, Ricardian equivalence, Rational expectations, and the permanent income hypothesis, Journal of Money, Credit and Banking 22, 305–326.CrossRefGoogle Scholar
  11. Homma, M., H. Abe, N. Atoda, T. Ihori, M. Kandori, and T. Mutoh, 1984, The debt neutrality hypothesis: theoretical and empirical analysis for the Japanese economy, Economic Analysis, Economic Planning Agency of Japan (in Japanese).Google Scholar
  12. Ihori, T., 1989, The degree of debt neutrality: some evidence for the Japanese economy, Economic Studies Quarterly 40, 66–74.Google Scholar
  13. Ihori, T., T. Doi and H. Kondo, 2001, Japanese fiscal reform: fiscal reconstruction and fiscal policy, Japan and the World Economy 13, 351–370.CrossRefGoogle Scholar
  14. Kotlikoff, L.J., 1992, Generational Accounting; Knowing Who Pays, and When, for What We Spend, The Free Press.Google Scholar
  15. Leiderman, L. and M.I. Blejer, 1990, Modeling and testing Ricardian equivalency IMF Staff Papers, 1–35.Google Scholar
  16. Normandin, M., 1999, Budget deficit persistence and the twin deficits hypothesis, Journal of International Economics 49, 171–193.CrossRefGoogle Scholar
  17. Seater, J.J., 1993, Ricardian equivalence, Journal of Economic Literature 31, 142–190.Google Scholar

Copyright information

© Springer Science+Business Media New York 2002

Authors and Affiliations

  • Toshihiro Ihori
  • Hiroki Kondo

There are no affiliations available

Personalised recommendations