Ghiglino, C and Shell, K (2003) The economic effects of restrictions on government budget deficits: Imperfect private credit markets. [UNSPECIFIED]

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Abstract

The present paper is an extension of Ghiglino and Shell to the case of imperfect consumer credit markets. We show that with constraints on individual credit and only anonymous (i.e., non-personalized) lump-sum taxes, strong (or "global") irrelevance of government budget deficits is not possible, and weak (or "local") irrelevance can hold only in very special situations. This is in sharp contrast to the result for perfect credit markets. With credit constraints and anonymous consumption taxes, weak irrelevance holds if the number of tax instruments is sufficiently large and at least one consumer's credit constraint is not binding. This is an extension of the result for perfect credit markets.

Item Type:	UNSPECIFIED
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics, Department of
Depositing User:	Jim Jamieson
Date Deposited:	16 Jul 2012 19:11
Last Modified:	17 Aug 2017 18:10
URI:	http://repository.essex.ac.uk/id/eprint/3015

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