Government debt reduction boosts economy by increasing capital stock and reducing taxes.
The article discusses how government debt should be managed in economies with different generations. It suggests that reducing debt now can lead to less taxes in the future and increase capital. The study uses a model to show that it's best for the government to have assets in the long run. However, the level of assets may not be enough to reach the optimal capital stock or eliminate income taxes. The research also calculates the best way for the government to reach this ideal state.