Social Insurance and the Public Budget

Dept. of Economics, University of Aarhus WP 1998-9

Posted: 8 Aug 1998

See all articles by Torben M. Andersen

Torben M. Andersen

University of Aarhus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Robert Rene Dogonowski

Aarhus University - Department of Economics and Business Economics

Multiple version iconThere are 2 versions of this paper

Abstract

Restraints on the public budget limit the ability of the public sector to use financial markets for intertemporal substitution. This interferes with the role of the public budget as a buffer which provides insurance and possibly stabilizes income and thereby private consumption. We consider this insurance or stabilizing role of public budgets and show why a progressive taxation system may be optimal even when the distortionary effects of taxation are taken into account. Balanced budget restrictions interfere with this insurance effect, and they do not necessarily imply that a lower level of public consumption is optimal.

JEL Classification: H20, H61, E62, D61, D80

Suggested Citation

Andersen, Torben M. and Dogonowski, Robert Rene, Social Insurance and the Public Budget. Dept. of Economics, University of Aarhus WP 1998-9, Available at SSRN: https://ssrn.com/abstract=100791

Torben M. Andersen (Contact Author)

University of Aarhus - Department of Economics ( email )

University Park
Building 322
DK-8000 Aarhus C
Denmark
+45 8 942 1609 (Phone)
+45 8 613 6334 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Robert Rene Dogonowski

Aarhus University - Department of Economics and Business Economics ( email )

Fuglesangs Allé 4
Aarhus V
Denmark
+45 8942 1133 (Phone)
+45 8613 6334 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
523
PlumX Metrics