Showing papers on "Golden Rule (fiscal policy) published in 1978"
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TL;DR: This paper used the life-cycle growth model to clarify the implications of government involvement in capital accumulation, arguing that a long-run trade-off between consumption possibilities is critical to long run optimality.
Abstract: The author uses the life-cycle growth model to clarify the implications of government involvement in capital accumulation, arguing that a long-run trade-off between consumption possibilities is critical to long-run optimality. The long-run capital/labor ratio is shown to determine the amount that each member of a given generation will consume in each period of his lifetime. With the option of redistributing income between generations, the optimal path of a centrally planned economy is less-restrictive. This is not true in the case of government activities financed by debt, which suggests the government's desired role at present is to provide a mechanism for redistributing income between the younger and older generations.
39 citations
25 citations
TL;DR: In this article, the impact of various policy instruments in a two-class Ramsey style model of optimal growth was studied, and the main conckusion is that without the availability of the ideal lump-sum tax, the (modified) golden rule is unlikely to be the optimal policy.
10 citations