The paper studies the macroeconomic effects of government spending shocks in an economy characterized by positive trend growth. It shows that the lower is the trend growth rate the less inflationary are government spending shocks and vice versa. Moreover, on impact output is higher but exhibits...

We document that the interest rate response to fiscal stimulus (IRRF) is lower in countries with high inequality or high household debt. To interpret this evidence we develop a model in which households take on debt to maintain a consumption threshold (saving constraint). Now debt-burdened,...

This paper develops an overlapping agents model with age-specific mortality rates. The analytical framework also nests Blanchard's (1985) perpetual youth model as a special, though perhaps not realistic, case. With age specific mortality rates, youth is fleeting. Using standard hyperbolic...

This paper examines the macroeconomic implications of life-cycle and dynastic saving behavior for closed and small, open economies. Using an extended version of Blanchard`s overlapping agents model, the analytical framework nests these two competing views, treating agents as either dynastic...

The theoretical literature presumes generational risk is large enough to merit study and that such risk can be meaningfully shared via appropriate government policy. This paper questions these propositions. It develops an 80-period OLG model to directly measure generational risk and the extent...

Recent empirical evidence strongly points to the state-dependence of fiscal multipliers which are larger in recessions than in expansions. Yet, standard business cycle models face great difficulty in producing such asymmetric fiscal policy effects. By incorporating endogenously binding...

We introduce the link between pollution, morbidity and productivity over the life-cycle in a two-period overlapping generations model. As the environmental tax improves the health-profile over the life-cycle, it influences saving, investment in health, labor supply and retirement. As a result,...

In this paper, we estimate the effect of a tax policy change on households' consumption and retirement savings behavior, by using a unique panel data of voluntary retirement savings (PPF) and debit card spending transactions. On average, we find that households reduce their consumption by 14%...

The theoretical literature presumes generational risk is large enough to merit study and that such risk can be meaningfully shared via appropriate government policies. This paper assesses these propositions. It develops a computational technique to overcome the curse of dimensionality and...

Japan seems to be turning less Ricardian, a trend set to continue. First, the discount wedge seems to have risen, suggesting that consumers have become more myopic. Second, some evidence points to the possibility that an increasing number of households are liquidity constrained. If these...