Contributions

  • Weil, Philippe - Contributor
  • Massachusetts Institute of Technology. Dept. of Economics - Contributor

Publication

2001 - Massachusetts Institute of Technology, Dept. of Economics, Cambridge, MA, Massachusetts

Language

English

Word Count

5,250 words, Guess

Page Count

21 pages

Identifiers

Alternate Titles

  • Ponzi games under uncertainty

Description

In a dynamically efficienct economy, can a government roll its debt forever and avoid the need to raise taxes? In a series of examples of production economies with zero growth, this paper shows that such Ponzi games may be infeasible even when the average rate of return on bonds is negative, and may be feasible even when the average rate of return on bonds is positive. The paper then reveals the structure which underlies these examples. Keywords: Dynamic efficiency, pareto optimality, bubbles, Ponzi games, public debt, riskless rate.

Subjects

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