Intra-Generational Conflict : The Role of Balanced Budget Rules

A balanced budget requirement affects the intra-generational wealth distribution and reduces the socially preferred level of government spending. These effects can explain why some groups support balanced budget rules while other groups in the same generation oppose them. Simulations suggest that the intra-generational distributive conflicts surrounding balanced budget rules are prevalent. Survey data suggests that they are empirically relevant. Intra-generational conflict offers a coherent explanation for the observed partial support balanced budget rule