Endogenous growth in a model with heterogeneous agents and voting on public goods
AbstractWe consider a Barro-type endogenous growth model in which the government’s purchases of goods and services enter into the production function. The provision of government services is financed by flat-rate (linear) income or lump-sum taxes. It is assumed that individuals differing in their discount factors vote on the tax rates. We propose a concept of voting equilibrium leading to some versions of the median voter theorem for steady-state equilibria, fully characterize steady-state equilibria and show that if the median voter discount factor is sufficiently low, the long-run rate of growth in the case of flat-rate income taxation is higher than that in the case of lump-sum taxation.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 27517.
Date of creation: 2010
Date of revision:
economic growth; voting; proportional; flat-rate; linear tax; lump-sum tax; heterogeneous agents; endogenous growth;
Other versions of this item:
- Kirill Borissov & Alexander Surkov, 2010. "Endogenous growth in a model with heterogeneous agents and voting on public goods," EUSP Deparment of Economics Working Paper Series Ec-01/10, European University at St. Petersburg, Department of Economics, revised 29 Sep 2010.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-03 (All new papers)
- NEP-CDM-2011-01-03 (Collective Decision-Making)
- NEP-DGE-2011-01-03 (Dynamic General Equilibrium)
- NEP-FDG-2011-01-03 (Financial Development & Growth)
- NEP-MAC-2011-01-03 (Macroeconomics)
- NEP-PBE-2011-01-03 (Public Economics)
- NEP-POL-2011-01-03 (Positive Political Economics)
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