<link rid="b3">Barsky, Mankiw and Zeldes (1986)</link> have argued that uncertainty about future income can generate strong 'Keynesian' responses to tax changes by consumers who have far-sighted 'Ricardian' preferences. The paper argues that this conclusion relies on an inappropriate treatment of future tax policies....

This paper uses a model of stochastic consumption behavior over the life cycle to reconsider earlier conclusions by R. B. Barsky, N. G. Mankiw and S. P. Zeldes (1986) and R. J. Barro (1989) about the extent to which income uncertainty can induce departures from pure debt neutrality. Its results...

In many contexts, individual agents' behavior depends on their expectations of other agents' expectations, about which there is no available source of objective information. Standard rational expectations models have avoided, not resolved, this problem. This paper models an alternative approach...