Government Spending, Local Indeterminacy and Tax Structure
AbstractThis paper develops an endogenous growth model where sustained growth is due to the introduction of a public input. Consumers derive utility from consumption, leisure and a public good. The public input and the public good are the flow of government expenditures. These expenditures are financed by means of income taxes. With these assumptions, it is shown that the dynamic equilibrium may exhibit local indeterminacy when the tax rate on the labour income is large. The tax structure that maximizes growth and the optimal tax structure are characterized and compared. Copyright (c) The London School of Economics and Political Science 2003.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 70 (2003)
Issue (Month): 280 (November)
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- Andreas Irmen & Johanna Kühnel, 2008.
"Productive Government Expenditure and Economic Growth,"
0464, University of Heidelberg, Department of Economics, revised May 2008.
- Andreas Irmen & Johanna Kuehnel, 2009. "Productive Government Expenditure And Economic Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 692-733, 09.
- Andreas Irmen & Johanna Kuehnel, 2008. "Productive Government Expenditure and Economic Growth," CESifo Working Paper Series 2314, CESifo Group Munich.
- Benos, Nikos, 2009. "Fiscal policy and economic growth: empirical evidence from EU countries," MPRA Paper 19174, University Library of Munich, Germany.
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