IDEAS home Printed from https://ideas.repec.org/a/kap/itaxpf/v5y1998i3p249-261.html
   My bibliography  Save this article

Growth and Welfare Effects of Fiscal Policy in an Endogenous Growth Model with Public Investment

Author

Listed:
  • Alfred Greiner
  • Horst Hanusch

Abstract

In this paper we analyze growth and welfare effects of fiscal policy in an endogenous growth model along the balanced growth path. As to the model we assume that sustained per capita growth results from public investment. The government uses its tax revenue for investment in public capital, for investment subsidy and for transfer payments. We then analyze how the balanced growth rate reacts to variations in those policy variables. Further, we study welfare effects of varying the fiscal parameters and demonstrate that, in general, maximizing economic growth is not equivalent to maximizing welfare on the balanced growth path. Copyright Kluwer Academic Publishers 1998

Suggested Citation

  • 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.
  • Handle: RePEc:kap:itaxpf:v:5:y:1998:i:3:p:249-261
    DOI: 10.1023/A:1008673925024
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1023/A:1008673925024
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    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. Judd, Kenneth L, 1985. "Short-run Analysis of Fiscal Policy in a Simple Perfect Foresight Model," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 298-319, April.
    3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    4. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
    5. 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.
    6. 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.
    7. Mendoza, Enrique G. & Milesi-Ferretti, Gian Maria & Asea, Patrick, 1997. "On the ineffectiveness of tax policy in altering long-run growth: Harberger's superneutrality conjecture," Journal of Public Economics, Elsevier, vol. 66(1), pages 99-126, October.
    8. 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.
    9. Greiner Alfred & Semmler Willi, 1996. "Saddle Path Stability, Fluctuations, and Indeterminacy in Economic Growth," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 1(2), pages 1-16, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alfredo Marvão Pereira & Rui Manuel Pereira, 2017. "Why Virtuous Supply-Side Effects and Irrelevant Keynesian Effects are not Foregone Conclusions: What we Learn from an Industry-Level Analysis of Infrastructure Investments in Portugal," GEE Papers 0076, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Aug 2017.
    2. Tamai, Toshiki, 2016. "Public investment, the rate of return, and optimal fiscal policy in a stochastically growing economy," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 1-17.
    3. Hosoya, Kei, 2014. "Public health infrastructure and growth: Ways to improve the inferior equilibrium under multiple equilibria," Research in Economics, Elsevier, vol. 68(3), pages 194-207.
    4. Chung-Hui Lai, 2015. "Effects of Intellectual Property Rights Protection and Integration on Economic Growth and Welfare," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 11(2), pages 143-162, July.
    5. repec:ebl:ecbull:v:5:y:2003:i:14:p:1-10 is not listed on IDEAS
    6. Alfred Greiner & Peter Flaschel, 2009. "Economic Policy in a Growth Model with Human Capital, Heterogenous Agents and Unemployment," Computational Economics, Springer;Society for Computational Economics, vol. 33(2), pages 175-192, March.
    7. Florian Misch & Norman Gemmell & Richard Kneller, 2013. "Growth and Welfare Maximization in Models of Public Finance and Endogenous Growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(6), pages 939-967, December.
    8. Tai, Meng-Yi & Chao, C.C. & Lu, Lee-Jung & Hu, Shih-Wen & Wang, Vey, 2016. "Land conservation, growth and welfare," The North American Journal of Economics and Finance, Elsevier, vol. 38(C), pages 102-110.
    9. Toshiki Tamai, 2006. "Fiscal Policy and Adjustment Costs of Private Investment in an Endogenous Growth Model with Public Capital," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(4), pages 455-470, December.
    10. Andreas Irmen & Johanna Kuehnel, 2009. "Productive Government Expenditure And Economic Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 692-733, September.
    11. Joseph G. ATTILA, 2008. "Corruption, taxation and economic growth: theory and evidence," Working Papers 200829, CERDI.
    12. Shieh, Jhy-yuan & Lai, Ching-chong & Chang, Wen-ya, 2002. "The impact of military burden on long-run growth and welfare," Journal of Development Economics, Elsevier, vol. 68(2), pages 443-454, August.
    13. Greiner, Alfred & Semmler, Willi, 2000. "Endogenous Growth, Government Debt and Budgetary Regimes," Journal of Macroeconomics, Elsevier, vol. 22(3), pages 363-384, July.
    14. Tapio Palokangas, 2003. "Inflationary Financing of Government Expenditure in an Endogenous Growth Model," German Economic Review, Verein für Socialpolitik, vol. 4(1), pages 121-137, February.
    15. Kei Hosoya, 2003. "Tax financed government health expenditure and growth with capital deepening externality," Economics Bulletin, AccessEcon, vol. 5(14), pages 1-10.
    16. Richard Funderburg & Timothy J. Bartik & Alan H. Peters & Peter S. Fisher, 2013. "The Impact Of Marginal Business Taxes On State Manufacturing," Journal of Regional Science, Wiley Blackwell, vol. 53(4), pages 557-582, October.
    17. repec:eee:jmacro:v:55:y:2018:i:c:p:1-11 is not listed on IDEAS
    18. Chen, Jhy-hwa & Shieh, Jhy-yuan & Chang, Juin-jen & Lai, Ching-chong, 2009. "Growth, welfare and transitional dynamics in an endogenously growing economy with abatement labor," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 423-437, September.
    19. Andreas Pyka & Uwe Cantner & Alfred Greiner & Thomas Kuhn (ed.), 2009. "Recent Advances in Neo-Schumpeterian Economics," Books, Edward Elgar Publishing, number 12982, June.
    20. Wen-Hsien Tsai & Hsiu-Li Lee & Chih-Hao Yang & Chung-Chen Huang, 2016. "Input-Output Analysis for Sustainability by Using DEA Method: A Comparison Study between European and Asian Countries," Sustainability, MDPI, Open Access Journal, vol. 8(12), pages 1-17, November.
    21. repec:bla:rdevec:v:21:y:2017:i:3:p:874-887 is not listed on IDEAS
    22. Fullerton, Don & Kim, Seung-Rae, 2008. "Environmental investment and policy with distortionary taxes, and endogenous growth," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 141-154, September.
    23. Jhy-Yuan Shieh & Wen-Ya Chang & Ching-Chong Lai, 2007. "An Endogenous Growth Model Of Capital And Arms Accumulation," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 557-575.

    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:kap:itaxpf:v:5:y:1998:i:3:p:249-261. 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). General contact details of provider: http://www.springer.com .

    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.