Dynamic fiscal policies and unemployment in a simple endogenous growth model
This paper analyzes the growth and employment effects of dynamic fiscal policies in an overlapping generations model with endogenous growth and imperfect labour markets. With balanced-budget policies, the modelled closed economy grows at a constant rate which is higher, the lower are the labour tax rate and the unemployment rate. Constant-flow budget policies are not feasible, while government Ponzi games are feasible only if economic agents have implausibly high savings rates. Furthermore, while constant-stock fiscal policies are sustainable, an increase in the debt-to-capital ratio is accompanied by higher taxes, a rise in unemployment and lower economic growth. Copyright Springer Science + Business Media, LLC 2006
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Noriyuki Yanagawa & Gene M. Grossman, 1992.
"Asset Bubbles and Endogenous Growth,"
NBER Working Papers
4004, National Bureau of Economic Research, Inc.
- C Bean & Christopher A. Pissarides, 1992.
"Unemployment, Consumption and Growth,"
CEP Discussion Papers
dp0100, Centre for Economic Performance, LSE.
- Cahuc, Pierre & Michel, Philippe, 1996.
"Minimum wage unemployment and growth,"
European Economic Review,
Elsevier, vol. 40(7), pages 1463-1482, August.
- Susanto Basu & John G. Fernald, 1995.
"Are Apparent Productive Spillovers a Figment of Specification Error?,"
NBER Working Papers
5073, National Bureau of Economic Research, Inc.
- Basu, Susanto & Fernald, John G., 1995. "Are apparent productive spillovers a figment of specification error?," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 165-188, August.
- Susanto Basu & John G. Fernald, 1994. "Are apparent productive spillovers a figment of specification error?," International Finance Discussion Papers 463, Board of Governors of the Federal Reserve System (U.S.).
- Basu, S. & Fernald, J.G., 1993. "Are Apparent Productive Spillovers a Figment of Specification Error," Papers 93-22, Michigan - Center for Research on Economic & Social Theory.
- O'Connell, Stephen A & Zeldes, Stephen P, 1988.
"Rational Ponzi Games,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(3), pages 431-50, August.
- Stephen A. O'Connell & Stephen P. Zeldes, . "Rational Ponzi Games," Rodney L. White Center for Financial Research Working Papers 18-86, Wharton School Rodney L. White Center for Financial Research.
- Francesco Daveri & Guido Tabellini, .
"Unemployment, Growth and Taxation in Industrial Countries,"
122, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Francesco Daveri & Guido Tabellini, 2000. "Unemployment, growth and taxation in industrial countries," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 47-104, 04.
- Daveri, Francesco & Tabellini, Guido, 1997. "Unemployment, Growth and Taxation in Industrial Countries," CEPR Discussion Papers 1681, C.E.P.R. Discussion Papers.
- Tirole, Jean, 1985. "Asset Bubbles and Overlapping Generations," Econometrica, Econometric Society, vol. 53(6), pages 1499-1528, November.
- King, Ian & Ferguson, Don, 1993. "Dynamic inefficiency, endogenous growth, and Ponzi games," Journal of Monetary Economics, Elsevier, vol. 32(1), pages 79-104, August.
- Burnside, Craig, 1996. "Production function regressions, returns to scale, and externalities," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 177-201, April.
- Philippe Aghion & Peter Howitt, 1994.
"Growth and Unemployment,"
Review of Economic Studies,
Oxford University Press, vol. 61(3), pages 477-494.
- Fabio Arico, 2003. "Growth and Unemployment: Towards a Theoretical Integration," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 419-455, 07.
When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:13:y:2006:i:6:p:701-716. 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: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.