Debts, Deficits and Economic Growth

Abstract

The following chapter differs from the rest in that it does not use the concept of the infinitely lived representative agent, but introduces consumer heterogeneity by allowing for birth and death of individuals. Although this extension seems much more realistic, it reveals the problem of welfare conclusions and theoretical complicity. Moreover, when interpreting the infinite agent as a family clan with perfect bequest motives, some questions, but certainly not the question of government debt as treated here, can be analyzed as well.