Growth and Welfare Effects of Fiscal Policy in an Endogenous Growth Model with Public Investment

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Growth and Welfare Effects of Fiscal Policy in an Endogenous Growth Model with Public Investment

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Alfred Greiner
Horst Hanusch

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Horst Hanusch

Abstract

In this paper we analyze growth and welfare effects of fiscal policy in an endogenous growth model along the balanced growth path. As to the model we assume that sustained per capita growth results from public investment. The government uses its tax revenue for investment in public capital, for investment subsidy and for transfer payments. We then analyze how the balanced growth rate reacts to variations in those policy variables. Further, we study welfare effects of varying the fiscal parameters and demonstrate that, in general, maximizing economic growth is not equivalent to maximizing welfare on the balanced growth path. Copyright Kluwer Academic Publishers 1998

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Publisher Info
Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 5 (1998)
Issue (Month): 3 (July)
Pages: 249-261
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Handle: RePEc:kap:itaxpf:v:5:y:1998:i:3:p:249-261

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Benhabib Jess & Farmer Roger E. A., 1994. "Indeterminacy and Increasing Returns," Journal of Economic Theory, Elsevier, vol. 63(1), pages 19-41, June. [Downloadable!] (restricted)
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Other versions:
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Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Blackwell Publishing, vol. 95(4), pages 607-25, December.
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Judd, Kenneth L, 1985. "Short-run Analysis of Fiscal Policy in a Simple Perfect Foresight Model," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 298-319, April. [Downloadable!] (restricted)
Other versions:
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Cited by:
(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.)

Florian Misch & Norman Gemmell & Richard Kneller, . "Growth and Welfare Maximization in Models of Public Finance and Endogenous Growth," Discussion Papers 08/09, University of Nottingham, CREDIT. [Downloadable!]
Don Fullerton & Seung-Rae Kim, 2006. "Environmental Investment and Policy with Distortionary Taxes and Endogenous Growth," NBER Working Papers 12070, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Fullerton, Don & Kim, Seung-Rae, 2008. "Environmental investment and policy with distortionary taxes, and endogenous growth," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 141-154, September. [Downloadable!] (restricted)
Kei Hosoya, 2003. "Tax financed government health expenditure and growth with capital deepening externality," Economics Bulletin, Economics Bulletin, vol. 5(14), pages 1-10. [Downloadable!]
Andreas Irmen & Johanna Kuehnel, 2008. "Productive Government Expenditure and Economic Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Other versions:
- Andreas Irmen & Johanna Kühnel, 2008. "Productive Government Expenditure and Economic Growth," Working Papers 0464, University of Heidelberg, Department of Economics, revised May 2008. [Downloadable!]
- Andreas Irmen & Johanna Kuehnel, 2009. "Productive Government Expenditure And Economic Growth," Journal of Economic Surveys, Blackwell Publishing, vol. 23(4), pages 692-733, 09. [Downloadable!] (restricted)
Alfred Greiner & Peter Flaschel, 2009. "Economic Policy in a Growth Model with Human Capital, Heterogenous Agents and Unemployment," Computational Economics, Springer, vol. 33(2), pages 175-192, March. [Downloadable!] (restricted)

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