Under the newly crooked neck tree, Jiang Xinghuo looked up at the canopy of the tree with tough branches after being ravaged by the autumn rain.

After looking at it for a long time, he said.

"Before answering this question, we might as well make a conjecture, whether this conjecture is correct or not, it is up to you to judge, how about it?"

"Yes."

"For example, the imperial court will issue Ming treasury bonds."

Jiang Xinghuo's eyelids drooped, and he deliberately 'explained' to Mr. Qiu: "Well, you didn't hear it in the last class, what about the meaning of the national debt, that is, the state issues a piece of paper, which is equivalent to an IOU, on which is written what the interest rate is for a few years, and when the time comes, the people who subscribe can take the national debt and take money from the imperial court with interest." Approximately, the state gave an IOU to the people. ”

Xia Yuanji showed a sudden realization without leaking, and he bowed his head again and again, and from time to time a sentence of praise came out.

Watching this Mr. Qiu's performance, Jiang Xinghuo's heart became more and more determined.

Feign!

Load!

First of all, it is impossible for the bearded man to find the former household official from the edict prison as soon as he looks for it temporarily.

Secondly, although the contact time is not long, according to the secret observation of half a class, this Mr. Qiu is extraordinary in conversation and knowledgeable, which is obviously not something that ordinary outsiders can have.

In the end, the big sun and moon treasury bonds have come out, and the genuine Daming treasury bonds have begun to circulate.

In fact, this class is also a test for Jiang Xinghuo.

There are only four lessons left in the Imperial Prison.

This is not possible.

As for amateur literacy, that is, the two months before he was released from prison, he was not delayed from prison.

Jiang Xinghuo plans to test whether the high-level leaders of the Ming Empire attach importance to their suggestions, or whether they can implement them even if the suggestions are a little more difficult.

That's why the Tax Police Corps was proposed.

If it really appears outside, then it means that the new emperor of the Ming Dynasty, the legendary Yongle Emperor, has already paid attention to himself.

The reason is also very simple, if Li Jinglong was in the edict prison before, then there is also a possibility that Li Jinglong wrote his own name to submit a proposal.

But now that Li Jinglong has sent an envoy to the Ryukyus (Jiang Xinghuo doesn't know that he is actually going to Japan), it is impossible to write his own name, right? Sent from the sea and on land, a check will show that Jinyiwei is not a fool.

Therefore, if Li Jinglong was not present to listen to the lecture, the high-level of the Ming Empire tried their own suggestions again.

There is only one conclusion.

"I'm really being noticed by the high-level of the Ming Empire, and even, changing the line of history?"

This idea made Jiang Xinghuo a little angry for a while.

Special meow, Lao Tzu is just squatting in prison to point out the country.

Why did you really do it?

What should I do if I get out of prison in the future?

Thinking of this, I don't know how the high-level leaders of the Ming Empire will treat themselves in the near future, Jiang Xinghuo has a little hesitation.

Just talk.

How can you really take it seriously!

But fortunately, Jiang Xinghuo has always been frank.

"I'm not afraid of death anyway."

Turning his mind, Jiang Xinghuo continued: "Then do you think there is a possibility? ”

"What is possible?"

The last praise of McJinglong is now in Japan as the emperor, all forces are vying for his support, he is gone, Zhu Gaoxu can only dutifully take over the baton of praise.

"That is, the state issues treasury bonds to raise funds, and the effect is the same as that of raising funds by increasing taxes?"

Jiang Xinghuo simply wrote a mathematical model on the ground, writing the utility function of economic agents, and the current budget constraints representing the state sector and the household sector, as well as intertemporal budget constraints (which can be understood as the expected limits on spending money in the future).

The utility function of economic agents

U=c1+βc2

Household sector

S1 (current budget constraint): c1=w1-t1-b

S2 (intertemporal budget constraint): C2=W2+(1+R)B-T2

State departments

s1 (current budget constraint): G1=Nt1+Nb

s2 (intertemporal budget constraint): G2=Nt2-N(1+r)b

Then, the Lagrangian multiplier method is used to solve the problem of maximizing the utility of economic agents, and FOC (first-order condition) is obtained.

c2=β(1+r)c1

This is the most basic and entry-level economic model of classical political economy, also known as "Ricardian equivalence".

This is David Ricardo's argument in Chapter 17 of his book Principles of Political Economy and Taxation that the government's choice of a lump sum tax or the issuance of public bonds to finance the government does not affect consumption and investment.

At the same time, "Ricardian equivalence" has played a lasting role after the rise and subsidence of Keynesian thought, and has also become an important part of neoclassical macroeconomics, which is of symbolic significance similar to "Tao" for the study of government debt, especially the modern fiscal structure.

The strange numbers and symbols on the ground are naturally incomprehensible to the two.

But this does not prevent them from questioning it on the basis of their own instinct or experience.

"The effect is definitely different." Zhu Gaoxu replied with a very simple reason: "If taxes are raised, the peasants will rise up and rebel." ”

Jiang Xinghuo nodded, and looked at 'Mr. Qiu' again.

Xia Yuanji's brows tightened, and he vaguely realized that the problem did not seem to be as simple as Zhu Gaoxu said.

Everyone knows that a tax hike will lead to a rebellion, but the core of the question is, why can the national debt be linked to the tax hike?

This couldn't help but make Xia Yuanji a little apprehensive, don't you make a mistake in the operation of the Ming treasury bonds?

"What do you think?"

"I think it's still different, it's definitely not as simple as raising taxes and rebelling, but I can't figure out where this pass is for a while." Natsuhara Yoshishi said honestly.

Jiang Xinghuo simply said: "I'll give you an example, you can understand it, right." ”

"Are state taxation and state borrowing (Ming treasury bonds) logically the same?"

"Assuming that the population of the Ming Dynasty reaches its peak, it is difficult for the total population to continue to grow due to the contradiction between man and land, so it can be regarded as not changing over time."

"[Hypothesis] Daming decided to reduce the current tax (one-time total tax) by 100 Wen copper coins for each person, and the resulting reduction in fiscal revenue was made up by issuing 100 Wen Daming treasury bonds to everyone (and then assuming that the maturity of Daming treasury bonds is one year and the annual interest rate is 5%), so as to ensure that the scale of Daming's fiscal expenditure will not change."

Jiang Xinghuo asked: "So in the second year after the tax cut, if Daming still decides to keep the balance of payments, what will happen?" ”

Xia Yuanji seemed to understand something, and he replied: "In the second year after the tax cut, if you still decide to maintain a balance between the payments and the balance, in order to repay the principal and interest of the Ming national debt, the Ming must pay an additional tax of 105 copper coins to everyone." ”

Jiang Xinghuo bowed slightly and continued.

"In the face of the adjustment of taxes in time, if he/she is [absolutely rational], can he/she increase his savings to cope with the next increase in taxes?"

"In fact, it is entirely possible to use the Ming treasury bonds worth 100 copper coins issued by the state as a result of tax cuts plus 5% interest as the expenditure to pay the government's additional tax of 105 copper coins to repay the principal and interest of the national bonds."

"In this way, the original consumption patterns of taxpayers will not change."

Zhu Gaoxu has already begun to "give birth to his mother", but Xia Yuanji's eyes are a little bright.

In the same way, if the maturity of the Ming Treasury is a number of years, the result is the same. This is because holders of Ming government bonds can receive interest on bonds from the government on one hand, and use the principal and interest on these bonds to pay higher taxes on the repayment of the principal and interest on the bonds. In this case, borrowing instead of taxing will not affect immediate and future consumption, and the equivalence theorem holds. ”

Jiang Xinghuo deliberately explained: "Consumption is spending money. ”

In fact, this is just a purely theoretical speculation, that is, even Ricardo, who put forward this theory in classical political economy, does not think that the above speculation works in reality, but later Barrow believes that rational people do act in this way, that is, the higher taxes of the government to repay the debt may partly fall on future generations, but people are concerned about future generations, so they will still increase their savings for the sake of future generations to meet the debt, which is based on the so-called "Ricardian equivalence" Barrow-Ricardo Equivalence Theorem".

According to this theorem, additional government debt as a result of tax cuts is used as potential future tax revenues, and given the overall budget constraints, the limits of public debt and potential tax revenues are equal in the absence of liquidity constraints. In this way, the two budget constraints before and after the change are essentially the same, so that people's consumption and investment will not be affected.

It stands to reason that a normal person can see that this theory is not quite right, how can people think so far?

Therefore, the "Barrow-Ricardo equivalence theorem" has been questioned and criticized by neoclassical synthesisists and neo-Keynesianism. One of the questions about Ricardo's equivalence theorem is whether people have an incentive to save for future tax increases beyond the boundaries of their lives.

If you write a literature review, it is. Modigliani's theory of the finite limit proposed that people do not care about things other than life, so the tax reduction effect of bond issuance will lead to an increase in consumer demand; Tóibín argues that Ricardo's equivalence theorem has too many constraints and does not correspond to reality; Mankiw analyzes the reasons why Ricardo's equivalence theorem does not hold true from three perspectives: consumer short-sightedness, debt constraints, and intergenerational wealth redistribution.

Barrow proposed the "Barrow-Ricardo equivalence theorem", in fact, to prove the ineffectiveness of fiscal policy.

Natsuharaji's head turned the fastest.

Xia Yuanji said: "From Mr. Jiang's explanation, although it can be seen that whether the current tax reduction is achieved by issuing short-term or long-term Daming treasury bonds, the equivalence theorem can be established. ”

"But."

Xia Yuanji changed his words and said, "I'm afraid this equivalence theorem can't explain the phenomenon I'm talking about." ”

"You say."

"Speak quickly!"

Looking at Jiang Xinghuo and Zhu Gaoxu's urging, Xia Yuanji pondered for a while.

"If some, or all, for example, there is a plague or war or flood in a certain place, and the common people who bought the Ming treasury bonds die before the imperial court repays the Ming national debts, and these people enjoy the benefits of the tax reduction brought by the imperial court by borrowing instead of taxation, and do not have to bear the future taxes that occur as a result (because they are dead), then will their spending and consumption behavior also not change during their lifetime?"

"That's right!"

Zhu Gaoxu then thought: "What if a person dies? ”

"When he was alive, the court cut taxes, and he enjoyed it; When he dies, people don't have to pay taxes! ”

To the surprise of the two, Jiang Xinghuo nodded and said.

The answer to this question may be that for ordinary people who were alive during the tax cut, but who died before the Ming court repaid the Ming national debt, the present value of their tax burden has fallen, and since they do not have to use the Ming government debt to pay the increased taxes of the imperial court to repay the Ming national debt, their current and future consumption will follow their disposable income. Well, it's the increase in the amount of money they can spend on it. If these ordinary people were completely self-interested, the above answer would invalidate the equivalence theorem. ”

"But."

Jiang Xinghuo also changed his mind.

"There are two problems here."

"First, will the common people think about future generations?"

"Second, will ordinary people predict when they will die unexpectedly?"

——————

"Stop, stop!"

Zhu Di hammered the skull with his fist.

"What is this?"

"Two Shangshu, you explain to me from the beginning!"

Jian Yi and Ru Yu glanced at each other.

Jian Yixian explained: "Your Majesty, what Jiang Xinghuo means is that all the common people between the fathers and children care about themselves and their descendants. So when the Ming court replaced the tax of 100 Wen with the issuance of 100 Wen Ming Treasury bonds, thereby reducing the tax burden of the people by 100 Wen that year, the people knew that this meant that the future tax would increase by 100 Wen. ”

Zhu Di nodded, he understood this, and motioned for Jian Yi to continue.

Emperor Jian Yi slowly explained: "Therefore, in the face of the reduction of the tax burden this year, the reaction of ordinary people will not be to increase their own spending, but to save the 100 Wen Ming treasury bonds they purchased." If he dies before the maturity of the Ming treasury bonds, the 100 Wen Ming treasury bonds will be left to his descendants as an inheritance to pay the increased taxes of the imperial court due to the increase in the burden of principal and interest of the Ming treasury bonds (the imperial court raises taxes in order to repay the money) Assuming that the Ming treasury bonds are still not due during the lifetime of his descendants, they can continue to be left to their descendants in order to pay the increased taxes when the Ming treasury bonds mature. ”

"It's just Jiang Xinghuo's assumption." Ru Yu followed up and said: "For any ordinary person who cares about future generations, it makes no difference whether the taxes raised by the imperial court to repay the principal and interest of the Ming treasury bonds issued by the imperial court are paid by him or his descendants. ”

Ru Yu further explained: "That is to say, whether the people died before the maturity of the national debt, this will not have an impact on his spending (consumption) this year, and the purchase of Daming national bonds will reduce personal consumption this year, just like paying taxes." ”

"To put it bluntly, it is discussing the issuance of Daming treasury bonds, will it affect the people to spend money?" Zhu Di interrupted Ru Yudao.

"Exactly."

Zhu Di puzzled: "Then what is the significance of discussing this kind of problem? Few people care about paying taxes for their children and grandchildren, right? ”

Monk Daoyan, who had not spoken, suddenly flicked the cuffs of his black robe and said.

"Of course it makes sense."

(End of chapter)