This paper, authored by Olivier J. Blanchard, explores the impact of finite horizons on macroeconomic issues such as the steady-state interest rate and the dynamic effects of government deficit finance. The author develops a simple analytical model where the horizon of economic agents is a parameter that can be chosen arbitrarily. The paper is divided into several sections: 1. **Characterization of the Economy Without Government**: The first three sections analyze the dynamics and steady state of the economy in the absence of a government, focusing on the effects of the horizon index on the economy. It clarifies the separate roles of finite horizons and declining labor income in determining steady-state interest rates. 2. ** Effects of Fiscal Policy**: The next three sections study the effects and role of fiscal policy, particularly the effects of deficit finance in both closed and open economies. The paper examines how government spending, deficits, and debt influence interest rates. 3. **Dynamic Behavior of an Economy with Finite Horizons**: The paper characterizes the dynamic behavior of an economy where agents have finite horizons, allowing for the aggregation of individual behaviors. 4. ** Effects of Government Debt and Deficits**: The paper analyzes the effects and role of government debt and deficits, focusing on intertemporal reallocations of taxes. It discusses how finite horizons imply a role for debt policy and how fiscal policy can be defined and evolve over time. 5. ** Steady State Effects of Fiscal Policy**: The paper characterizes the steady-state effects of fiscal policy in both closed and open economies, showing that the level of debt can be chosen by the government to achieve desired levels of capital and consumption. 6. **Dynamic Effects of Fiscal Policy**: The paper examines the dynamic effects of specific fiscal policies, such as government and current account deficits, and how they affect the sequence of interest rates and asset accumulation in an open economy. The paper concludes by discussing the rigorous characterization of the effects of intertemporal reallocations of taxes when agents have finite horizons and the usefulness of the aggregate consumption function and the index of fiscal policy.This paper, authored by Olivier J. Blanchard, explores the impact of finite horizons on macroeconomic issues such as the steady-state interest rate and the dynamic effects of government deficit finance. The author develops a simple analytical model where the horizon of economic agents is a parameter that can be chosen arbitrarily. The paper is divided into several sections: 1. **Characterization of the Economy Without Government**: The first three sections analyze the dynamics and steady state of the economy in the absence of a government, focusing on the effects of the horizon index on the economy. It clarifies the separate roles of finite horizons and declining labor income in determining steady-state interest rates. 2. ** Effects of Fiscal Policy**: The next three sections study the effects and role of fiscal policy, particularly the effects of deficit finance in both closed and open economies. The paper examines how government spending, deficits, and debt influence interest rates. 3. **Dynamic Behavior of an Economy with Finite Horizons**: The paper characterizes the dynamic behavior of an economy where agents have finite horizons, allowing for the aggregation of individual behaviors. 4. ** Effects of Government Debt and Deficits**: The paper analyzes the effects and role of government debt and deficits, focusing on intertemporal reallocations of taxes. It discusses how finite horizons imply a role for debt policy and how fiscal policy can be defined and evolve over time. 5. ** Steady State Effects of Fiscal Policy**: The paper characterizes the steady-state effects of fiscal policy in both closed and open economies, showing that the level of debt can be chosen by the government to achieve desired levels of capital and consumption. 6. **Dynamic Effects of Fiscal Policy**: The paper examines the dynamic effects of specific fiscal policies, such as government and current account deficits, and how they affect the sequence of interest rates and asset accumulation in an open economy. The paper concludes by discussing the rigorous characterization of the effects of intertemporal reallocations of taxes when agents have finite horizons and the usefulness of the aggregate consumption function and the index of fiscal policy.