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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"Productive Government Expenditure and Economic Growth,"
CESifo Working Paper Series
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- Hosoya, Kei, 2012. "Growth and multiple equilibria: A unique local dynamics," Economic Modelling, Elsevier, vol. 29(5), pages 1662-1665.
- Takeo Hori & Noritaka Maebayashi, 2013. "Indeterminacy and utility-generating government spending under balanced-budget fiscal policies," Discussion Papers in Economics and Business 13-13, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- 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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