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Public Investment Rules and Indeterminacy

  • Panagiotis Tsintzos

    ()

    (Democritus University of Thrace Department of International Economic Relations and Development)

This paper examines the rise of indeterminacy when public investment fiscal rules are implemented. The framework employed by our analysis is the standard endogenous growth model with productive public capital. The government can choose to invest in infrastructure according to two different rules; one by simply indexing investment to a fixed proportion of output and another by indexing to taxes. For both scenarios we examine the existence of global and local indeterminacy and state the differences in dynamics of the two cases

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File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I1-P2.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 32 (2012)
Issue (Month): 1 ()
Pages: 7-15

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Handle: RePEc:ebl:ecbull:eb-11-00563
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  1. 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 _128, Chinese University of Hong Kong, Department of Economics.
  2. Jan-Egbert Sturm & Gerard H. Kuper & Jakob de Haan,, 1996. "Modelling government investment and economic growth at the macro level: A review," Working Papers 29, Centre for Economic Research, University of Groningen and University of Twente.
  3. Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 607-25, December.
  4. Ghosh, Sugata & Mourmouras, Iannis A., 2004. "Endogenous growth, welfare and budgetary regimes," Journal of Macroeconomics, Elsevier, vol. 26(4), pages 623-635, December.
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