Advanced Search
MyIDEAS: Login to save this paper or follow this series

Indeterminacy and utility-generating government spending under balanced-budget fiscal policies

Contents:

Author Info

  • Takeo Hori

    ()
    (College of Economics, Aoyama Gakuin University)

  • Noritaka Maebayashi

    ()
    (Graduate School of Economics, Osaka University)

Registered author(s):

    Abstract

    We reexamine indeterminacy and utility-generating public spending under balanced- budget rules in a simple one-sector growth model. The introduction of consumption tax (subsidy) as well as subsidies for savings and labor modify indeterminacy con- ditions in the existing studies. We show that if consumption subsidies and income taxes exist, indeterminacy occurs even when private and public consumption are Edgeworth substitutes and public spending and leisure are separable in the utility function. Indeterminacy also occurs even when they are weak Edgeworth comple- ments if consumption tax and subsidies for savings and labor are present. Surpris- ingly, when they are strong Edgeworth complements, the stronger external effects of public consumption tend to lower the possibility of equilibrium indeterminacy in the presence of consumption tax.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1313.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 13-13.

    as in new window
    Length: 24 pages
    Date of creation: Jul 2013
    Date of revision:
    Handle: RePEc:osk:wpaper:1313

    Contact details of provider:
    Email:
    Web page: http://www.econ.osaka-u.ac.jp/
    More information through EDIRC

    Related research

    Keywords: utility-generating public spending; indeterminacy; balanced-budget rule;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Jess Benhabib & Roger E.A. Farmer, 1992. "Indeterminacy and Increasing Returns," UCLA Economics Working Papers, UCLA Department of Economics 646, UCLA Department of Economics.
    2. Jang-Ting Guo & Sharon G. Harrison, 2008. "Useful Government Spending and Macroeconomic (In)stability under Balanced-Budget Rules," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(3), pages 383-397, 06.
    3. Cazzavillan, Guido, 1996. "Public Spending, Endogenous Growth, and Endogenous Fluctuations," Journal of Economic Theory, Elsevier, Elsevier, vol. 71(2), pages 394-415, November.
    4. Mino, Kazuo, 2001. "Indeterminacy and Endogenous Growth with Social Constant Returns," Journal of Economic Theory, Elsevier, Elsevier, vol. 97(1), pages 203-222, March.
    5. Jaime Alonso-Carrera & Jordi Caballe & Xavier Raurich, 2005. "Can consumption spillovers be a source of equilibrium indeterminacy?," Working Papers 154, Barcelona Graduate School of Economics.
    6. Karras, Georgios, 1994. "Government Spending and Private Consumption: Some International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 26(1), pages 9-22, February.
    7. Shigeyuki Hamori & Kazumi Asako, 1999. "Government consumption and fiscal policy: some evidence from Japan," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 6(9), pages 551-555.
    8. Teresa Lloyd-Braga & Leonor Modesto & Thomas Seegmuller, 2008. "Tax Rate Variability and Public Spending as Sources of Indeterminacy," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00194395, HAL.
    9. Xavier Raurich, 2003. "Government Spending, Local Indeterminacy and Tax Structure," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 70(280), pages 639-653, November.
    10. Theodore Palivos & Chong K. Yip & Junxi Zhang, 2000. "Transitional Dynamics and Indeterminacy of Equilibria is an Endogenous Growth Model with a Public Input," Departmental Working Papers, Chinese University of Hong Kong, Department of Economics _128, Chinese University of Hong Kong, Department of Economics.
    11. Benhabib, Jess & Nishimura, Kazuo, 1996. "Indeterminancy and Sunspots with Constant Returns," Working Papers, C.V. Starr Center for Applied Economics, New York University 96-44, C.V. Starr Center for Applied Economics, New York University.
    12. Bean, Charles R, 1985. "The Estimation of 'Surprise' Models and the 'Surprise' Consumption Function," CEPR Discussion Papers, C.E.P.R. Discussion Papers 54, C.E.P.R. Discussion Papers.
    13. Aschauer, David Alan, 1985. "Fiscal Policy and Aggregate Demand," American Economic Review, American Economic Association, American Economic Association, vol. 75(1), pages 117-27, March.
    14. Fiorito, Riccardo & Kollintzas, Tryphon, 2002. "Public Goods, Merit Goods, and the Relation Between Private and Government Consumption," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3617, C.E.P.R. Discussion Papers.
    15. Fernandez, Esther & Novales, Alfonso & Ruiz, Jesus, 2004. "Indeterminacy under non-separability of public consumption and leisure in the utility function," Economic Modelling, Elsevier, Elsevier, vol. 21(3), pages 409-428, May.
    16. repec:hal:journl:halshs-00194395 is not listed on IDEAS
    17. Okubo, Masakatsu, 2003. "Intratemporal substitution between private and government consumption: the case of Japan," Economics Letters, Elsevier, Elsevier, vol. 79(1), pages 75-81, April.
    18. Chen, Been-Lon & Hsu, Mei, 2007. "Admiration is a source of indeterminacy," Economics Letters, Elsevier, Elsevier, vol. 95(1), pages 96-103, April.
    19. Kamiguchi, Akira & Tamai, Toshiki, 2011. "Can productive government spending be a source of equilibrium indeterminacy?," Economic Modelling, Elsevier, Elsevier, vol. 28(3), pages 1335-1340, May.
    20. Chong K. Yip & Junxi, Zhang, 1994. "Transitional Dynamics and Indeterminacy of Equilibria in an Endogenous Growth Model with Public Input," Departmental Working Papers, Chinese University of Hong Kong, Department of Economics _050, Chinese University of Hong Kong, Department of Economics.
    21. Ni, Shawn, 1995. "An empirical analysis on the substitutability between private consumption and government purchases," Journal of Monetary Economics, Elsevier, Elsevier, vol. 36(3), pages 593-605, December.
    22. Adrian R. Fleissig & Robert J. Rossana, 2003. "Are Consumption and Government Expenditures Substitutes or Complements? Morishima Elasticity Estimates from the Fourier Flexible Form," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 41(1), pages 132-146, January.
    23. Benhabib Jess & Perli Roberto, 1994. "Uniqueness and Indeterminacy: On the Dynamics of Endogenous Growth," Journal of Economic Theory, Elsevier, Elsevier, vol. 63(1), pages 113-142, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:osk:wpaper:1313. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Atsuko SUZUKI).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.