Tax Discounting in a High-debt Economy
This paper estimates a consumption function for Belgium that allows for government debt discounting and for the overall discounting of the future (reflecting the consumers' planning horizon or precautionary savings). It also allows for substitutability or complementarity effects from government expenditures. Results suggest that consumers do take into account (future) government activity. Ricardian Equivalence is rejected however, since we cannot reject a relatively short planning horizon or a precautionary savings motive for the consumers. We use bootstrapped distributions for inference since the instrumental variables estimators used may have non-standard distributions. This procedure also helps to tackle potential endogeneity and sample size problems. Copyright 2003 Blackwell Publishing Ltd.
Year of publication: |
2003
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Authors: | Pozzi, Lorenzo |
Published in: |
Oxford Bulletin of Economics and Statistics. - Department of Economics, ISSN 0305-9049. - Vol. 65.2003, 3, p. 261-282
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Publisher: |
Department of Economics |
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