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Excludable and Non-Excludable Public Inputs: Consequences for Economic Growth

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  • Ingrid Ott
  • Stephen Turnovsky

Abstract

Many public goods are characterized by rivalry and/or excludability. This paper introduces both non-excludable and excludable public inputs into a simple endogenous growth model. We derive the equilibrium growth rate and design the optimal tax and user-cost structure. Our results emphasize the role of congestion in determining this optimal financing structure and the consequences this has in turn for the government’s budget. The latter consists of fee and tax revenues that are used to finance the entire public production input and that may or may not suffice to finance the entire public input, depending upon the degree of congestion. We extend the model to allow for monopoly pricing of the user fee by the government. Most of the analysis is conducted for general production functions consistent with endogenous growth, although the case of CES technology is also considered.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1423.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1423

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Keywords: excludable and non-excludable public goods; congestion; growth;

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References

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Citations

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Cited by:
  1. Bhattacharyya, Chandril, 2014. "A Note on Endogenous Growth with Public Capital," MPRA Paper 55728, University Library of Munich, Germany.
  2. Schiffbauer, Marc, 2008. "Catching Up or Falling Behind? The Effect of Infrastructure Capital on Technology Adoption in Transition Economies," Papers, Economic and Social Research Institute (ESRI) DYNREG27, Economic and Social Research Institute (ESRI).
  3. Mihaela Pintea & Stephen Turnovsky, 2006. "Congestion and Fiscal Policy in a Two-Sector Economy with Public Capital: A Quantitative Assessment," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 28(2), pages 177-209, September.
  4. Chatterjee, Santanu & Mahbub Morshed, A.K.M., 2011. "Infrastructure provision and macroeconomic performance," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 35(8), pages 1288-1306, August.
  5. Andreas Irmen & Johanna Kühnel, 2008. "Productive Government Expenditure and Economic Growth," Working Papers, University of Heidelberg, Department of Economics 0464, University of Heidelberg, Department of Economics, revised May 2008.
  6. George Economides & Apostolis Philippopoulos, 2012. "Are User Fees Really Regressive?," CESifo Working Paper Series 3875, CESifo Group Munich.
  7. Ingrid Ott & Susanne Soretz, 2006. "Governmental activity and private capital adjustment," Working Paper Series in Economics, University of Lüneburg, Institute of Economics 26, University of Lüneburg, Institute of Economics.
  8. Benos, Nikos, 2009. "Fiscal policy and economic growth: empirical evidence from EU countries," MPRA Paper 19174, University Library of Munich, Germany.
  9. Ingrid Ott & Susanne Soretz, 2006. "Nachhaltige Entwicklung durch endogeneUmweltwahrnehmung," Working Paper Series in Economics, University of Lüneburg, Institute of Economics 24, University of Lüneburg, Institute of Economics.
  10. 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.
  11. Chetan Ghate & Gerhard Glomm & Jialu Liu, 2012. "Sectoral infrastructure investment in an unbalanced growing economy: The Case of India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers, Indian Statistical Institute, New Delhi, India 12-07, Indian Statistical Institute, New Delhi, India.
  12. Pierre-Richard Agénor & Kyriakos C. Neanidis, 2007. "Optimal Taxation and Growth with Public Goods and Costly Enforcement," Centre for Growth and Business Cycle Research Discussion Paper Series, Economics, The Univeristy of Manchester 89, Economics, The Univeristy of Manchester.
  13. Ingrid Ott & Susanne Soretz, 2006. "Regional growth strategies: fiscal versus institutional governmental policies," Working Paper Series in Economics, University of Lüneburg, Institute of Economics 30, University of Lüneburg, Institute of Economics.
  14. Altar, Moisa & Necula, Ciprian & Bobeica, Gabriel, 2008. "Modeling The Economic Growth In Romania. The Influence Of Fiscal Regimes," Journal for Economic Forecasting, Institute for Economic Forecasting, Institute for Economic Forecasting, vol. 5(4), pages 146-160, December.
  15. Chu, Hsun & Lai, Ching-Chong & Cheng, Chu-Chuan, 2013. "Tax Havens, Growth, and Welfare," MPRA Paper 52878, University Library of Munich, Germany, revised Sep 2013.
  16. Economides, George & Park, Hyun & Philippopoulos, Apostolis, 2011. "How Should The Government Allocate Its Tax Revenues Between Productivity-Enhancing And Utility-Enhancing Public Goods?," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 15(03), pages 336-364, June.
  17. Monisankar Bishnu & Chetan Ghate & Pawan Gopalakrishnan, 2013. "Factor income taxation, growth, and investment specific technological change," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers, Indian Statistical Institute, New Delhi, India 13-04, Indian Statistical Institute, New Delhi, India.
  18. Chatterjee, Santanu & Mahbub Morshed, A.K.M., 2011. "Reprint to: Infrastructure provision and macroeconomic performance," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 35(9), pages 1405-1423, September.

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