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Discussion Papers In Economics And Business. 2012, 11-02-Rev.2

Redistributive Politics and Government Debt in a Borrowing-constrained Economy

Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University

英語

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2012-05

http://www2.econ.osaka-u.ac.jp/library/global/dp/1102R2.pdf

* Revised: [11-02, 2011]

We develop a two-period, three-class of income model where low-income agentsare borrowing constrained because of capital market imperfections, and where redistributiveexpenditure is financed by tax and government debt. When the degreeof capital market imperfection is high, there is an ends-against-the-middle equilibriumwhere the constrained low-income and the unconstrained high-income agentsfavor low levels of government debt and redistributive expenditure; these agentsform a coalition against the middle. In this equilibrium, the levels of governmentdebt and expenditure might be below the efficient levels, and the spread of incomedistribution results in a lower debt-to-GDP ratio.

13447

Redistributive Politics and Government Debt in a Borrowing-constrained Economy

Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University

英語

2012-05

Discussion Papers In Economics And Business

11-02-Rev.2

https://hdl.handle.net/11094/13447

http://www2.econ.osaka-u.ac.jp/library/global/dp/1102R2.pdf