IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-19-00277.html
   My bibliography  Save this article

A note on fiscal policy, indeterminacy, and endogenous time preference

Author

Listed:
  • Toshiki Tamai

    () (Graduate School of Economics, Nagoya University)

Abstract

This paper presents an endogenous growth model with productive public goods and an endogenous time preference. The time preference is positively associated with consumption and negatively affected by income. Fiscal policy not only directly influences macroeconomic equilibrium and therefore the dynamic stability of macroeconomic equilibria but also indirectly influences them via the endogenous time preference. The overall effect of productive public goods provides a strong externality that generates indeterminacies of the equilibrium growth paths. This study derives the sufficient condition for the indeterminacy and clarifies the relation between fiscal policy and indeterminacy. The results show that Barro's (1990) tax rule for growth and welfare maximization, which equals the output elasticity of productive public goods, attains its purpose and stabilization of the dynamic equilibrium under certain conditions.

Suggested Citation

  • Toshiki Tamai, 2019. "A note on fiscal policy, indeterminacy, and endogenous time preference," Economics Bulletin, AccessEcon, vol. 39(1), pages 615-625.
  • Handle: RePEc:ebl:ecbull:eb-19-00277
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I1-P62.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Benhabib Jess & Farmer Roger E. A., 1994. "Indeterminacy and Increasing Returns," Journal of Economic Theory, Elsevier, vol. 63(1), pages 19-41, June.
    2. Alfred Greiner, 1998. "Fiscal policy in an endogenous-growth model with public investment: A note," Journal of Economics, Springer, vol. 68(2), pages 193-198, June.
    3. Jean-Pierre Drugeon, 1998. "A model with endogenously determined cycles, discounting and growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(2), pages 349-369.
    4. 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 607-625, December.
    5. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    6. Alfred Greiner & Horst Hanusch, 1998. "Growth and Welfare Effects of Fiscal Policy in an Endogenous Growth Model with Public Investment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 249-261, July.
    7. Cazzavillan, Guido, 1996. "Public Spending, Endogenous Growth, and Endogenous Fluctuations," Journal of Economic Theory, Elsevier, vol. 71(2), pages 394-415, November.
    8. Chen, Been-Lon, 2006. "Public capital, endogenous growth, and endogenous fluctuations," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 768-774, December.
    9. Fernandez, Esther & Novales, Alfonso & Ruiz, Jesus, 2004. "Indeterminacy under non-separability of public consumption and leisure in the utility function," Economic Modelling, Elsevier, vol. 21(3), pages 409-428, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Fiscal policy; Indeterminacy; Endogenous time preference;

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • H5 - Public Economics - - National Government Expenditures and Related Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-19-00277. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.