On the Political Economy of Deficit Bias and Immigration
Bibliographic Data
| ID | 9707004 |
|---|---|
| Authors | Michael Ben‐Gad (0000-0001-8641-4199, City, University of London, corresponding author) |
| Year | 2018 |
| Volume | 128 |
| Issue | 614 |
| Pages | 2191-2221 |
| Publication date | 2018-09-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/ecoj.12502 |
| OpenAlex | W2584818753 |
| Language | EN |
| References cited | 19 |
How much can governments shift the cost of their expenditure from today’s voters to tomorrow’s generations of immigrants, without resorting to taxation that is explicitly discriminatory? I demonstrate that if their societies are absorbing continuous flows of new immigrants, we should expect governments that represent the interests of today’s population to choose policies that shift some portion of the tax burden to the future, even if that population is altruistically linked to future generations. To measure the deficit bias, I analyse the dynamic behaviour of an optimal growth model with overlapping dynasties and factor taxation, calibrated for the US economy, and consider the welfare implications for today’s population and their descendants of intertemporal shifts in the tax rates on labour and asset income as well as transfer payments. Models with overlapping infinite-lived dynasties allow for a very clear distinction between natural population growth (an increase in the size of existing dynasties) and immigration (the addition of new dynasties). They also provide an alternative to the strict dichotomy between models with overlapping generations, where agents disregard the impact of their choices on future generations, and the quasi-Ricardian world of infinite-lived dynasties with representative agents that fully participate in both the economy and the political system in every period. The trajectory of the debt burden predicted by the model is a good match for the rise in US Federal Government debt since the early 1980’s, as well as the increases in debt projected by the Congressional Budget Office over the next few decades
Construct (python library · Current account · Debt · Deficit spending · Economics · Exchange rate · Government (linguistics · Government Debt · Immigration · Macroeconomics · Monetary economics · Political science · Politics · Public finance · Financial Literacy, Pension, Retirement Analysis · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth
Can Immigration Alleviate the Demographic Burden?
The Role of Immigration in Dealing with the Developed World's Demographic Transition
Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives
Redistributive taxation in a simple perfect foresight model
Why a Stubborn Conservative would Run a Deficit
Optimal fiscal and monetary policy in an economy without capital
Frontiers of Business Cycle Research
The Contribution of Immigration to United States Population Growth
Sustaining Fiscal Policy through Immigration
| Citation velocity | historical |
|---|---|
| Highly cited | No |