Optimal Public Debt with Life Cycle Motives†

• 成果类型: Article
• 署名作者: Peterman, William B.; Sager, Erick
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20180247
• 发表日期: 2022
• 页码: 404-437
• 关键词: Optimal taxation; capital income; government debt; INEQUALITY; EFFICIENCY; insurance; transfers; RISK

摘要

This paper determines optimal public debt in a life cycle model with incomplete markets that matches the empirically observed variation in consumption, labor, and savings. We find that public savings-not public debt-equal to 168 percent of output is optimal, primarily due to the influence of the life cycle on household decision-making. By inducing a lower interest rate, public savings slow consumption and leisure growth over an average household's lifetime, and the result-ing flatter allocation of lifetime consumption and leisure improves welfare. These life cycle welfare benefits are large-on net, they out-weigh the transitional costs from a tax-financed public debt elimina-tion. (JEL D15, D52, E21, E43, E62, G51, H63)