This paper outlines how deficit-neutral fiscal settings, via their impact on the growth/distribution equation, can play a positive role in minimizing deviant macroeconomic performance. The conventional Solow-Swan model of economic growth assigns no role to the standard instruments of fiscal policy in influencing the equilibrium growth path. In the model presented here, government fiscal policy--in the form of tax and transfer rates--is shown to have real effects on the long-term growth path of the unionized macroeconomy, even when the budget is permanently balanced and policy is fully announced. Copyright 1995 by The Economic Society of Australia.
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Article provided by The Economic Society of Australia in its journal The Economic Record.
Volume (Year): 71 (1995) Issue (Month): 215 (December) Pages: 354-66 Download reference. The following formats are available: HTML
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