Fiscal Policy Composition, Public Debt, and Economic Activity
This paper uses a dynamic general equilibrium model i) to investigate how changes to different spending and revenue items of the budget affect economic activity and public finance; and ii) to evaluate the welfare costs of alternative fiscal policy maneuvers. The paper shows that, unlike an increase in government purchases of final goods, an increase in public employment and transfers can have a contractionary effect on the economy in the same way as a rise in tax rates. It also suggests that fiscal adjustments implemented by cutting spending items increase households' welfare and are more effective in reducing the primary deficit and public debt than are increases in tax rates. Copyright 2001 by Kluwer Academic Publishers
Volume (Year): 109 (2001)
Issue (Month): 3-4 (December)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/public+finance/journal/11127/PS2|
When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:109:y:2001:i:3-4:p:301-25. 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.