The Federal Reserve Board eagle logo links to home page

International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page Two Equivalence Theorems for Government Finance
Dahai Yu
1998-622  (September 1998)

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.

Full paper (67 KB PDF) | Full paper (711 KB Postscript)

Debt composition, Ricardian equivalence, general equilibrium

PDF files: Adobe Acrobat Reader   ZIP files: PKWARE

Home | IFDPs | List of 1998 IFDPs
To comment on this site, please fill out our feedback form.
Last update: July 19, 2001