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Public Debt and redistribution with borrowing constraints

“We build a model with financial imperfections and heterogeneous agents and analyse the effects of two types of fiscal policy: revenue-neutral, intratemporal redistribution; and debt-financed tax cuts, which we interpret as intertemporal redistribution. Under flexible prices, the two policies are eitherneutral or display effects that are at odds with the empirical evidence. With sticky prices,…

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Government Weakness and ElectoralCycles in Local Public Debt:Evidence from Flemish Municipalities

ABSTRACT  Empirical research on Political Business (and Budget) Cycles is moresupportive for electoral cycles in policies than in macro-economic outcomes. But even pre-electoral policy cycles receive no unanimous confirmation. In the present paper, we give credence to recent arguments that this may be due to the disregard for the political,economic and institutional context in which politicians make…

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