Understanding Public Debt Preferences - 10.1628/001522112X659556 - Mohr Siebeck

Friedrich Heinemann, Tanja Hennighausen

Understanding Public Debt Preferences

Section: Articles
FinanzArchiv (FA)

Volume 68 () / Issue 4, pp. 406-430 (25)

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Surprisingly little is known about voters' public debt preferences on a micro level. This is deplorable, given the importance of the fiscal stability culture in the context of the European public debt crisis. This contribution tests, for a self-designed representative German survey, debt preferences and their determinants. Our results indicate that a Ricardian approach has some importance for explaining individual heterogeneity of consolidation preferences – emphasizing, for example, the importance of individual credit constraints. However, Ricardian reasoning is not able to give a complete picture. Theories of debt determination that point to societal coordination failures or ideology offer additional explanations with empirical backing. The magnitude of these additional effects is substantial; the size of the trust variable is not smaller than the intergenerational dummy for the presence of children.

Friedrich Heinemann No current data available.

Tanja Hennighausen No current data available.