Budget Balance, Welfare, and the Growth Rate: "Dynamic Scoring" of the Long-Run Government Budget

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Budget Balance, Welfare, and the Growth Rate: "Dynamic Scoring" of the Long-Run Government Budget

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Bruce, Neil
Turnovsky, Stephen J

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Abstract

This paper determines conditions under which a reduction in the role of government, either through a tax cut alone, or together with accompanying expenditure cuts, will improve long-run government fiscal balance. For a ceteris paribus cut in the income tax rate to improve long-run government balance, the intertemporal elasticity of substitution must exceed unity. A tax cut balanced by an expenditure cut is likely to improve the long-run balance even if it does not improve the short-run balance. The relationship between improving the long-run fiscal balance and economic welfare is also analyzed.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 31 (1999)
Issue (Month): 2 (May)
Pages: 162-86
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Handle: RePEc:mcb:jmoncb:v:31:y:1999:i:2:p:162-86

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Ingrid Ott & Stephen Turnovsky, 2005. "Excludable and Non-Excludable Public Inputs: Consequences for Economic Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
Other versions:
- Ott Ingrid & Stephen Turnovsky, 2005. "Excludable and Non-excludable Public Inputs: Consequences for Economic Growth," Working Papers UWEC-2006-02-P, University of Washington, Department of Economics, revised Jun 2005. [Downloadable!]
- Ingrid Ott & Stephen J. Turnovsky, 2005. "Excludable and Non-excludable Public Inputs: Consequences for Economic Growth," Working Paper Series in Economics 2, University of Lüneburg, Institute of Economics. [Downloadable!]
- Ingrid Ott & Stephen J. Turnovsky, 2006. "Excludable and Non-excludable Public Inputs: Consequences for Economic Growth," Economica, London School of Economics and Political Science, vol. 73(292), pages 725-748, November. [Downloadable!] (restricted)
Marcelo Bianconi & Walter H. Fisher, 2003. "Intertemporal Budget Policies and Macroeconomic Adjustment in a Small Open Economy," Discussion Papers Series, Department of Economics, Tufts University 0312, Department of Economics, Tufts University. [Downloadable!]
Other versions:
- Fisher, Walter H. & Bianconi, Marcelo, 2001. "Intertemporal Budget Policies and Macroeconomic Adjustment in a Small Open Economy," Economics Series 96, Institute for Advanced Studies. [Downloadable!]
- Bianconi, Marcelo & Fisher, Walter H., 2005. "Intertemporal budget policies and macroeconomic adjustment in a small open economy," Journal of International Money and Finance, Elsevier, vol. 24(1), pages 1-17, February. [Downloadable!] (restricted)
Fredriksson, Anders, 2007. "Compositional and dynamic Laffer effects in models with constant returns to scale," Research Papers in Economics 2007:2, Stockholm University, Department of Economics, revised 21 Apr 2007. [Downloadable!]
Trabandt, Mathias & Uhlig, Harald, 2006. "How Far Are We From the Slippery Slope? The Laffer Curve Revisited," CEPR Discussion Papers 5657, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Other versions:
- Mathias Trabandt & Harald Uhlig, 2006. "How Far Are We From The Slippery Slope? The Laffer Curve Revisited," SFB 649 Discussion Papers SFB649DP2006-023, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
Jhy-yuan Shieh & Ching-chong Lai & Wen-Ya Chang, 2002. "Endogenous Growth and Defense Expenditures: A New Explanation of the Benoit Hypothesis," Defence and Peace Economics, Taylor and Francis Journals, vol. 13(3), pages 179-186, January. [Downloadable!] (restricted)
Stephen Turnovsky, 2000. "The Transitional Dynamics of Fiscal Policy: Long-run Capital Accumulation and Growth," Discussion Papers in Economics at the University of Washington 0018, Department of Economics at the University of Washington. [Downloadable!]
Other versions:
- Stephen Turnovsky, 2002. "The Transitional Dynamics of Fiscal Policy: Long-run Capital Accumulation and Growth," Working Papers UWEC-2002-22-P, University of Washington, Department of Economics. [Downloadable!]
- Stephen J. Turnovsky, 2000. "The Transitional Dynamics Of Fiscal Policy; Long-Run Capital Accumulation And Growth," Computing in Economics and Finance 2000 199, Society for Computational Economics. [Downloadable!]
- Stephen Turnovsky, 2000. "The Transitional Dynamics of Fiscal Policy: Long-run Capital Accumulation and Growth," Working Papers 0018, University of Washington, Department of Economics. [Downloadable!]
- Turnovsky, Stephen J, 2004. "The Transitional Dynamics of Fiscal Policy: Long-Run Capital Accumulation and Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(5), pages 883-910, October.
Eric M. Leeper & Shu-Chun Susan Yang, 2006. "Dynamic Scoring: Alternative Financing Schemes," Caepr Working Papers 2006-022, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington. [Downloadable!]
Other versions:
- Eric M. Leeper & Shu-Chun Susan Yang, 2006. "Dynamic Scoring: Alternative Financing Schemes," NBER Working Papers 12103, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Leeper, Eric M. & Yang, Shu-Chun Susan, 2008. "Dynamic scoring: Alternative financing schemes," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 159-182, February. [Downloadable!] (restricted)
Ingrid Ott & Susanne Soretz, 2004. "Growth and Welfare Effects of Tax Cuts: The Case of a Productive Public Input with Technological Risk," Economic Change and Restructuring, Springer, vol. 31(2), pages 117-135, June. [Downloadable!] (restricted)
Other versions:
- Ingrid Ott & Susanne Soretz, 2004. "Growth and Welfare Effects of Tax Cuts: The Case of a Productive Public Input with Technological Risk," Empirica, Springer, vol. 31(2), pages 117-135, June. [Downloadable!] (restricted)
Agell, Jonas & Persson, Mats, 2000. "On Analytics of the Dynamic Laffer Curve," Seminar Papers 682, Stockholm University, Institute for International Economic Studies. [Downloadable!]
Jonas Agell & Mats Persson, 2000. "On the Analytics of the Dynamic Laffer Curve," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
Agell, Jonas & Persson, Mats, 2000. "On the Analytics of the Dynamic Laffer Curve," Working Paper Series 2000:5, Uppsala University, Department of Economics. [Downloadable!]

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