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Public Spending

In: Public Finance in an Overlapping Generations Economy

Author

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  • Toshihiro Ihori

    (University of Tokyo)

Abstract

In this chapter, we investigate positive and normative effects of public spending. Most of the previous literature on government expenditure has investigated the effect of public spending financed by lump-sum taxes (or wage income taxes with exogenous labor supply). The conventional view is that an increase in public spending, which will not contribute to stimulating production has a negative impact on capital formation due to the resource withdrawal effect.

Suggested Citation

  • Toshihiro Ihori, 1996. "Public Spending," Palgrave Macmillan Books, in: Public Finance in an Overlapping Generations Economy, chapter 5, pages 99-115, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-38990-8_5
    DOI: 10.1057/9780230389908_5
    as

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