Working Paper
Two equivalence theorems for government finance
Abstract: This paper studies the effects of a path change in government debt composition and aggregate transfers on allocations and prices. It is shown that the effects are zero under some agent-specific transfer scheme even when markets are incomplete. If markets are complete, then the effects are zero under any transfer scheme that leaves each agent's lifetime resource unchanged if and only if agents are always collectively compensated for next period's return change. The infinite-horizon framework used has an arbitrary number of assets with arbitrary returns and an arbitrary mixture of finitely and infinitely lived agents.
Keywords: Finance, Public;
Access Documents
File(s): File format is text/html http://www.federalreserve.gov/pubs/ifdp/1998/622/default.htm
File(s): File format is application/pdf http://www.federalreserve.gov/pubs/ifdp/1998/622/ifdp622.pdf
Authors
Bibliographic Information
Provider: Board of Governors of the Federal Reserve System (U.S.)
Part of Series: International Finance Discussion Papers
Publication Date: 1998
Number: 622