DEBT ILLUSION AND IMPERFECT INFORMATION.

The output and employment effects of bond finance depend critically on the assumption that government bonds are regarded by the public as net wealth. This paper analyzes the possibility that debt illusion can exist because of uncertainty about true economic opportunities; there is a learning problem...

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Detalles Bibliográficos
Publicado en:European Economic Review Vol. 11; no. 4; pp. 379 - 387
Autores principales: Floyd, John E., Hynes, J. Allan
Formato: Artículo
Publicado: Elsevier B.V. Dec78
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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      dt: Dec78
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        10.1016/S0014-2921(78)80008-7
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          Floyd, John E.
          Hynes, J. Allan
        affil: Erindale College, University of Toronto, Mississauga, Ont. L5L 1C6, Canada.
      su:
        Labor supply
        Production (Economic theory)
        Employment
        Government securities
        Economic policy
        Wealth
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        subj:
          Labor supply
          Production (Economic theory)
          Employment
          Government securities
          Economic policy
          Wealth
      ab: The output and employment effects of bond finance depend critically on the assumption that government bonds are regarded by the public as net wealth. This paper analyzes the possibility that debt illusion can exist because of uncertainty about true economic opportunities; there is a learning problem. In some cases, traditional wealth effects can be rationalized in terms of rational short run learning behavior. In other cases, the same general considerations may lead to responses that are opposite to those usually assumed. And policies that have short run effects in the direction conventionally assumed may, in the long run, reverse their direction of impact, thus giving rise to critical timing problems.
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    language: English
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