Precautionary Saving and the Timing of Taxes / Miles S. Kimball, N. Gregory Mankiw.

By:

Kimball, Miles S

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w2680.Publication details: Cambridge, Mass. National Bureau of Economic Research 1988.Description: 1 online resource: illustrations (black and white)Subject(s):

E - Macroeconomics and Monetary Economics

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Abstract: This paper analyzes the effects of government debt and income taxes on consumption and saving in a world of infinitely-lived households having uncertain and heterogeneous incomes. The special structure of the model allows exact aggregation across households despite incomplete markets. The effects of government debt are shown to be substantial, roughly comparable to those resulting from finite horizons, and crucially dependent on the length of time until the debt is repaid. Also, anticipated changes in taxes are shown to cause anticipated changes in consumption. Finally, an index of fiscal stance is derived.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w2680 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w26797 Uncovered Interest Parity, Forward Guidance, and the Exchange Rate /	nber w26798 Global Macro-Financial Cycles and Spillovers /	nber w26799 The Secured Credit Premium and the Issuance of Secured Debt /	nber w2680 Precautionary Saving and the Timing of Taxes /	nber w26800 Markups, Labor Market Inequality and the Nature of Work /	nber w26801 A New Mechanism to Alleviate the Crises of Confidence in Science-With An Application to the Public Goods Game /	nber w26802 Leverage Dynamics and Financial Flexibility /	Next

August 1988.

This paper analyzes the effects of government debt and income taxes on consumption and saving in a world of infinitely-lived households having uncertain and heterogeneous incomes. The special structure of the model allows exact aggregation across households despite incomplete markets. The effects of government debt are shown to be substantial, roughly comparable to those resulting from finite horizons, and crucially dependent on the length of time until the debt is repaid. Also, anticipated changes in taxes are shown to cause anticipated changes in consumption. Finally, an index of fiscal stance is derived.