19. Effect of a change in taxes The change in taxes cancels out, and the consumer’s intertemporal budget constraint is _______________.
20. Household Intertemporal Budget Constraint Y 2 -T 2 Y 1 -T 1 + T Y 2 -T 2 -(1+r) T Y 1 -T 1 C 2 C 1 S S’ The tax cut has no effect on the household inter-temporal budget constraint. So the household ____________________________________.
Chapter 15 is short but fun. Lots of policy & real-world relevance, little theory (a nice breather after the analytically challenging chapters 10-13). In the textbook, the chapter ends with a case study on inflation-indexed Treasury bonds. I would love to include a time-series graph of data on interest rates on these so-called “I-bonds” and on standard Treasuries with the same maturity: the difference between the rates in the secondary market provides a handy measure of expected inflation. If you know a handy source for such data, PLEASE let me know!!! Thanks!
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