When Interest Rates Go Low, Should Public Debt Go High?

• 成果类型: Article
• 署名作者: Brumm, Johannes; Feng, Xiangyu; Kotlikoff, Laurence; Kubler, Felix
• 署名单位: Helmholtz Association; Karlsruhe Institute of Technology; Xiamen University; Boston University; University of Zurich
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20230154
• 发表日期: 2024
• 页码: 432-469
• 关键词: social-security; dynamic efficiency; RISK; MODEL; GROWTH; consumption; welfare

摘要

Is deficit finance free when real borrowing rates are routinely lower than growth rates? Specifically, can the government make all generations better off by perpetually taking from the young and giving to the old? We study this in stochastic closed- and open-economy OLG models. Unfortunately, Pareto gains are predicted only for implausible calibrations. Even then, the gains reflect improved inter- generational risk sharing, improved international risk sharing, and beggaring thy neighbor-not intergenerational redistribution, per se. As we show, theoretically and quantitatively, low government borrowing rates suggest state-contingent bilateral transfers between generations- not unconditional, unilateral redistribution from future to current generations. ( JEL E43, E62, F41, H55, H63)