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Huixin Bi, Ms. Wenyi Shen, and Susan Yang Shu-Chun

Distributions Fiscal limits are defined as the expected sum of the discounted maximum primary fiscal surplus over an infinite horizon. By iterating (9) forward, imposing the tranversality conditions for government debt, and assuming no default at t ( ∆ t = 0), we obtain the equilibrium debt valuation equation of government real debt liabilities at t . b t − 1 π t = ∑ i = 0 ∞ β t i E t [ λ t + i λ