Sovereign debt and consumption smoothing

Article Abstract:

Studies have revealed that contingent debt servicing repudiation reduces the possibilities for future consumption smoothing. In contrast with this is contingent debt issuance, which has no regard whether sovereign debt reaches any positive debt ceiling repudiation and still would not reduce the possibilities for future consumption smoothing. If the sovereign decides to repudiate its debt, the expected present value of present and future consumption can be as large as the sum of present liquid assets and expected present value of present and future income.

Research, Consumption (Economics), Sovereign debt market, Repudiation (Finance)

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Dynamic efficiency in the gifts economy

Article Abstract:

Parental saving results in a reduction in gifts from children in a gifts economy, thus reducing net returns to saving where gifts are positive, an analysis which contrasts with standard views where actions of parents and children are given. The effective tax on saving in a gift economy takes equilibrium to dynamic efficiency. This finding also contributes to the debate on Ricardo's views on equivalence, and has implications for social security polices and analyses of effective taxation on accumulation of capital.

Noncommercial research organizations, Analysis, Gifts, Capital formation, Efficient market theory

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