SFB 303 Discussion Paper No. A - 241

Author: Wildasin, David E.
Title: Non-Neutrallity of Debt with Endogenous Fertility
Abstract: This paper examines the impact of government borrowing on the real equilibrium of an economy with intergenerational or dynastic utility maximizers and endogenous fertility. In general, incremental government borrowing reduces fertility. In addition, borrowing may increase per head consumption and lower the aggregate capital stock. At the same time, it may raise the capital/labor ratio and the wage/rental ratio, lower utility per head for the current generation, and raise utility per head of future generations. Identical results obtain for unfunded social security programs.
Creation-Date: April 1989
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