'Unfunded liabilities' and uncertain fiscal financing

Troy Davig, Eric Leeper, Todd B Walker

Research output: Contribution to journalArticleResearchpeer-review

58 Citations (Scopus)


A rational expectations framework is developed to study the consequences of alternative means to resolve the unfunded liabilities problem-unsustainable exponential growth in federal Social Security, Medicare,and Medicaid spending with no plan to finance it. Resolution requires specifying a probability distribution for how and when monetary and fiscal policies will change as the economy evolves through the 21st century. Beliefs based on that distribution determine the existence of and the nature of equilibrium.
Original languageEnglish
Pages (from-to)600 - 619
Number of pages20
JournalJournal of Monetary Economics
Issue number5
Publication statusPublished - 2010
Externally publishedYes

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