Abstract
Rational and forward-looking individuals know that government debts today mean higher taxes in the future. The Ricardian equivalence at the national level implies that the burden of the debt cannot be shifted between generations as intergenerational transfers allow the future generation to pay back the debts. We argue that at the local level a similar equivalence holds even for non-altruistic individuals but works through a different channel: Landed property persists over time and fiscal differences are capitalized in property values. Our theoretical model predicts that communities with a more favorable asset/debt structure have, ceteris paribus, higher property prices. We confirm these predictions empirically using a panel dataset for communities in the Swiss metropolitan area of Zurich.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
