GENERAL DISCUSSION

摘要

Alan Blinder had three comments related to the authors' assumptions. The first was the assumption that the net deficit effect will be financed with lump sum taxes. How the net deficit effect will ultimately be financed is uncertain; but according to Blinder, we know with absolute certainty that it will not be financed with lump sum taxes. Instead, it will be financed with something distortionary. He suggested a cleaner assumption would be to finance the net deficit effect with something akin to the average amount of distortion in the tax system. But the assumption of no distortions, he argued, is "absolutely wrong."Second, Blinder was concerned about the Ramsey framework's assumption that the long-run real interest rate is constant, equal to the time-preference rate. Under this assumption, the long run is in essence the "infinity run," which in turn is subject to a whole host of its own assumptions-for instance, that everyone's behavior is essentially the same. He argued that under any policy-relevant time horizon-such as a decade or two-there is an upward-sloping supply curve of capital. Thus, the real interest rate likely moves above the time-preference rate, all things remaining equal, implying a smaller effect on capital formation. Echoing discussant Kent Smetters, Blinder argued that the basic real rate for federal borrowing should be thought of as the risk-free rate; and because the risk-free rate has been falling for decades, he concluded that the authors' interest rate assumptions are biased.