LACK OF COMMITMENT AND THE LEVEL OF DEBT

• 成果类型: Article
• 署名作者: Debortoli, Davide; Nunes, Ricardo
• 署名单位: University of California System; University of California San Diego
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1111/jeea.12030
• 发表日期: 2013
• 页码: 1053-1078
• 关键词: monetary-policy; positive theory; time consistency; taxes

摘要

Abstract The tendency of countries to accumulate public debt has been rationalized in models of political disagreement and lack of commitment. We analyze in a benchmark model how the evolution of public debt is affected by lack of commitment per se. While commitment introduces indeterminacy in the level of debt, lack of commitment creates incentives for debt to converge to specific levels. One of the levels that debt often converges to implies no debt accumulation at all. In a simple example we prove analytically that debt converges to zero, and we analyze numerically more complex models. We also show in an imperfect credibility setting that a small deviation from full-commitment is enough to obtain these results.