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Scale, Congestion and Growth

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Author Info
Eicher, Theo
Turnovsky, Stephen J

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Abstract

This paper explores the relationship between aggregate and relative congestion, returns to scale and economic growth. Aggregate congestion reduces the effective productivity of capital: relative congestion reduces the effective productivity of labour. Both forms of congestion adversely affect the equilibrium growth rate, although their relative effects depend upon aggregate returns to scale. The two forms of congestion have contrasting effects on the transitional dynamics. Relative congestion retards the rate of adjustment: aggregate congestion accelerates it. The externalities generated by congestion and non-optimal expenditure can be fully corrected, both during the transition and in steady state, by a time-invariant income tax. Copyright 2000 by The London School of Economics and Political Science

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Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 67 (2000)
Issue (Month): 267 (August)
Pages: 325-46
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Handle: RePEc:bla:econom:v:67:y:2000:i:267:p:325-46

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  6. repec:cup:macdyn:v:1:y:1997:i:3:p:615-39 is not listed on IDEAS
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  22. Turnovsky, Stephen J., 1996. "Optimal tax, debt, and expenditure policies in a growing economy," Journal of Public Economics, Elsevier, vol. 60(1), pages 21-44, April. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. George Economides & Hyun Park & Apostolis Philippopoulos, 2007. "How should the government allocate its tax revenues between productivity-enhancing and utility-enhancing public goods?," Working Papers 2007_40, Department of Economics, University of Glasgow. [Downloadable!]
  2. Ott, Ingrid & Soretz, Susanne, 2006. "Infrastruktur als Investitionsdeterminante von KMU," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-329, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
  3. Pierre-Richard Agénor, 2005. "Infrastructure, Public Education and Growth with Congestion Costs," The School of Economics Discussion Paper Series 0524, Economics, The University of Manchester. [Downloadable!]
    Other versions:
  4. Mihaela Pintea, 2004. "Fiscal Policy in a Two-Sector Economy with Public Capital and Congestion," Working Papers 0402, Florida International University, Department of Economics. [Downloadable!]
    Other versions:
  5. Calin Arcalean & Gerhard Glomm & Ioana Schiopu, 2007. "Growth Effects of Spatial Redistribution Policies," Caepr Working Papers 2007-002, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
  6. P R Agénor & K C Neanidis, 2006. "Corruption Clubs: The Allocation of Public Expenditure and Economic Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 69, Economics, The Univeristy of Manchester. [Downloadable!]
  7. Ingrid Ott, 2004. "Bureaucratic corruption and macroeconomic performance," Computing in Economics and Finance 2004 303, Society for Computational Economics. [Downloadable!]
  8. Ingrid Ott & Stephen Turnovsky, 2005. "Excludable and Non-Excludable Public Inputs: Consequences for Economic Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  9. Stephen J Turnovsky & Goncalo Monteiro, . "Consumption Externalities, Production Externalities and Efficient Capital Accumulation under Time Non-separable Preferences," Discussion Papers 05/08, Department of Economics, University of York. [Downloadable!]
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  10. Ingrid Ott & Susanne Soretz, 2006. "Regional growth strategies: fiscal versus institutional governmental policies," Working Paper Series in Economics 30, University of Lüneburg, Institute of Economics. [Downloadable!]
  11. P R Agénor, 2005. "Fiscal Policy and Endogenous Growth with Public Infrastructure," Centre for Growth and Business Cycle Research Discussion Paper Series 59, Economics, The Univeristy of Manchester. [Downloadable!]
    Other versions:
  12. Cem Karayalcin, 2005. "Divided We Stand, United We Fall: The Hume-Weber-Jones Mechanism for the Rise of Europe," Working Papers 0509, Florida International University, Department of Economics. [Downloadable!]
  13. Ingrid Ott & Susanne Soretz, 2006. "Governmental activity and private capital adjustment," Working Paper Series in Economics 26, University of Lüneburg, Institute of Economics. [Downloadable!]
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