The Impact of Simple Fiscal Rules in Growth Models with Public Goods and Congestion
AbstractIn this paper we examine the implication of a simple class of fiscal rules for long-run economic growth and welfare. The golden rule of public finance (GRPF) that we examine is motivated by institutional arrangements in countries such as Germany and the UK. We find that rules which seek to limit government borrowing to productive investment spending have a clear justification in terms of growth and welfare when government provided goods are otherwise excessively provided. Even in the case where it is private consumption that is excessive, the GRPF is likely to be good from a growth perspective, but the welfare effects are more ambiguous.
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Bibliographic InfoPaper provided by Centre for Dynamic Macroeconomic Analysis in its series CDMA Working Paper Series with number 200502.
Date of creation: 15 Jan 2005
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Other versions of this item:
- Sugata Ghosh & Charles Nolan, 2007. "The Impact Of Simple Fiscal Rules In Growth Models With Public Goods And Congestion," Manchester School, University of Manchester, vol. 75(5), pages 634-651, 09.
- NEP-ALL-2005-01-16 (All new papers)
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