Intergenerational policies, public debt, and economic growth: A politico-economic analysis

This study presents a two-period overlapping-generations model with endogenous growth. In each period, the government representing young and old generations provides a public good financed by labor income taxation and public debt issuance, and the government's policies are determined by probabilistic voting. Increased political power of the old lowers economic growth. A debt-ceiling rule is considered to resolve the negative growth effect, but it creates a trade-off between generations in terms of welfare. (C) 2018 Elsevier B.V. All rights reserved.