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To fight the negative economic effects of the Covid-19 virus, several European governments have promised large...

To fight the negative economic effects of the Covid-19 virus, several European governments have promised large stimulus packages and tax cuts. Will such measures transfer wealth from future to current generations? Under which circumstances?

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These measures will transfer wealth from future to current generation in circumstances when Ricardian equivalence is applied. As per the Recardian Equivalence, tax cuts in present days to the current generation, will be recovered by the higher tax applied upon the future generations. It means that income and wealth increased at present, is financed from future generation and wealth of future generation is being reduced. So, if these conditions are met, the statement of transfer of wealth from future to present generation is correct.

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