Does it Pay to Have a Balanced Government Budget?
AbstractThis paper presents an endogenous growth model with public capital and public debt. The primary-surplus-to-GDP ratio is set such that it is a positive function of the debt ratio, which is a necessary condition for the intertemporal budget constraint of the government. The paper studies growth and welfare effects of the model, assuming a balanced government budget, and compares the outcome with the scenario where public debt grows in the long run, but at a smaller rate than capital and consumption, and with the scenario where public debt grows at the same rate as capital and consumption.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 164 (2008)
Issue (Month): 3 (September)
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Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
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- Alfred Greiner, 2013. "Debt and growth: Is there a non-monotonic relation?," Economics Bulletin, AccessEcon, vol. 33(1), pages 340-347.
- Alfred Greiner, 2010. "Does the 'Golden Rule of Public Finance' imply a lower long-run growth rate? A clarification," Economics Bulletin, AccessEcon, vol. 30(2), pages 975-982.
- Greiner, Alfred, 2012. "Public debt in a basic endogenous growth model," Economic Modelling, Elsevier, vol. 29(4), pages 1344-1348.
- Tsintzos, Panagiotis & Dergiades, Theologos, 2011. "Uncertainty in the public debt market and stochastic long-run growth," Economic Modelling, Elsevier, vol. 28(1-2), pages 67-73, January.
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