Productive government expenditure and fiscal sustainability
AbstractWe consider an overlapping generations model in which public spending directly contributes to grow up productivity as Barro (1990) and a government comforts the constant spending-GDP and debtspending ratio rules. We analyse policy effects on fiscal sustainability, growth rate and welfare. This paper gives some remarks as follows: First, we demonstrate that when spending-GDP ratio rises it may be more sustainable fiscal policy. Second, we show analytically that if higher spending-GDP ratio is more sustainable fiscal policy, it brings higher growth rate in both short-term and long-term. Third, such policy change is Pareto improving. These remarks are not obtained in previous researches on fiscal sustainability.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 8553.
Date of creation: 02 May 2008
Date of revision:
Other versions of this item:
- Real Arai, 2011. "Productive Government Expenditure and Fiscal Sustainability," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 67(4), pages 327-351, December.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-10 (All new papers)
- NEP-CBA-2008-05-10 (Central Banking)
- NEP-DGE-2008-05-10 (Dynamic General Equilibrium)
- NEP-MAC-2008-05-10 (Macroeconomics)
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- repec:ner:dauphi:urn:hdl:123456789/4341 is not listed on IDEAS
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