The Conditions for a Balanced Growth in a Model with Public Finance: an Analytic Solution
AbstractThis paper studies the equilibrium dynamics of a growth model with public finance where two different allocations of public resources are considered. The model simulta- neously determines the optimal shares of consumption, capital accumulation, taxes and composition of the two different public expenditures which maximize a representative household’s lifetime utilities for a centralized economy. The analysis supplies a closed form solution. Moreover, with one restriction on the parameters ( = ) we fully de- termine the solutions path for all variables of the model and determine the conditions for a balanced growth.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 36600.
Date of creation: 2011
Date of revision:
growth models; fiscal policy; public spending composition;
Find related papers by JEL classification:
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-20 (All new papers)
- NEP-DGE-2012-02-20 (Dynamic General Equilibrium)
- NEP-FDG-2012-02-20 (Financial Development & Growth)
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