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Fiscal Policy and Long-Run Growth in R&D-Based Models with Endogenous Market Structure

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  • Peretto, Pietro F

Abstract

This paper shows that in a model of endogenous growth that does not exhibit the scale effect, taxes on consumption and labor income and the level and composition of public expenditure have no effect on steady-state growth. The only fiscal instruments that affect steady-state growth are taxes on asset and corporate income. In line with standard intuition, tax rates and public expenditure have level effects on income per capita. These results emphasize that although growth is endogenous, in the sense that it is determined by the model and it is subject to policy action, instruments that work by changing market size do not affect it. Effective growth-enhancing policies operate through the interest rate. Copyright 2003 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Economic Growth.

Volume (Year): 8 (2003)
Issue (Month): 3 (September)
Pages: 325-47

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Handle: RePEc:kap:jecgro:v:8:y:2003:i:3:p:325-47

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Web page: http://www.springerlink.com/link.asp?id=102931

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Cited by:
  1. Andreas Irmen & Johanna Kühnel, 2008. "Productive Government Expenditure and Economic Growth," Working Papers 0464, University of Heidelberg, Department of Economics, revised May 2008.
  2. A. Minniti & F. Venturini, 2014. "R&D Policy and Schumpeterian Growth: Theory and Evidence," Working Papers wp945, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Rosa Capolupo, . "The New Growth Theoris and their Empirics," Working Papers, Business School - Economics, University of Glasgow 2005_4, Business School - Economics, University of Glasgow.
  4. Ram Sharan Kharel Ph.D., 2012. "Modelling and Forecasting Fiscal Policy and Economic Growth in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, Nepal Rastra Bank, Research Department, vol. 24(1), pages 1-15, April.
  5. Norman Gemmell & Richard Kneller & Ismael Sanz, 2011. "The Timing and Persistence of Fiscal Policy Impacts on Growth: Evidence from OECD Countries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 121(550), pages F33-F58, February.
  6. Dr. (elect.) Julia Korosteleva & Dr. Colin Lawson, . "The Belarusian Case of Transition: Whither Financial Repression?," Working Papers, Business School - Economics, University of Glasgow 2006_4, Business School - Economics, University of Glasgow.
  7. Tiago Sequeira, 2004. "Mortality Rate and Property Rights in a Model with Human Capital and R&D," Development and Comp Systems 0408010, EconWPA.
  8. Guido Cozzi & Giammario Impullitti, 2008. "Government spending composition, technical change and wage inequality," Working Papers, Business School - Economics, University of Glasgow 2009_02, Business School - Economics, University of Glasgow.
  9. Rosa Capolupo, 2005. "THE NEW GROWTH THEORIES AND THEIR EMPIRICS, Discussion Paper in Economics, University of Glasgow, N. 2005-04 (http://www.gla.ac.uk/Acad/Economics," GE, Growth, Math methods, EconWPA 0506003, EconWPA.
  10. Capolupo, Rosa, 2008. "The New Growth Theories and Their Empirics after Twenty Years," Economics Discussion Papers 2008-27, Kiel Institute for the World Economy.
  11. Ram Sharan Kharel Ph.D., 2012. "Modelling and Forecasting Fiscal Policy and Economic Growth in Nepal," NRB Working Paper, Nepal Rastra Bank, Research Department 09/2012, Nepal Rastra Bank, Research Department.
  12. Gemmell, Norman & Kneller, Richard & Sanz, Ismael, 2013. "The Growth Effects of Tax Rates in the OECD," Working Paper Series 2706, Victoria University of Wellington, Chair in Public Finance.
  13. Norman Gemmell & Joey Au, 2013. "Do Smaller Governments Raise the Level or Growth of Output? A Review of Recent Evidence," Review of Economics, Lucius & Lucius, vol. 64(2), pages 85-116.
  14. Kizuku Takao, 2014. "Dynamic effects of anticipated and temporary tax changes in a R&D-based growth model," ISER Discussion Paper 0913, Institute of Social and Economic Research, Osaka University.
  15. repec:nrb:journl:v:24:y:2012:i:1:p:1 is not listed on IDEAS
  16. Kizuku Takao, 2014. "Dynamic effects of anticipated and temporary tax changes in a R&D-Based growth model," Discussion Papers in Economics and Business 14-10, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

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