What are the conditions under which Ricardian equivalence holds?

The intertemporal budget constraint refers to the trade-off between current and future consumption that individuals face, given their current income and future ... combined with the intertemporal budget constraint, determine the optimal allocation of (c1,t,h1,t,c2,t+1,h2,t+1). 1.1.2 Tax on Capital Mimics Age-Dependent ... It does not address budget constraints: an impulse to demand from government spending comes out of thin air, rather than being offset by taxation or a cut. 1 ... +. +. +. , and so on – are discount factors. 116. We will refer to this last expression as the intertemporal government budget constraint, which is an infinite- ... The level of consumption will be determined by the intertemporal budget constraint (7). • The population growth rate n does not enter into these expressions. Oct 26, 2017 ... the government's present value budget constraint (PVBC) holds. • the credit market clears: Sp = B. That is, private savings = quantity of debt ... If the consumer faces an intertemporal budget constraint. C1 + β C2 = constant, where β = 1/(1 + interest rate) is the period-1 equivalent of a dollar in ... Sep 3, 2019 ... ... budget constraint is always binding ⇒ the consumer spends all his life-time income. 6 / 37. Page 7. Budget constraint. • To plot the budget ... how is the deficit financed? • bond sales to the private sector or the central bank (money creation). • government inter-temporal ... It establishes the link which exists between the prevailing level of government indebtedness and the future debt servicing requirements.