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Dynamic Fiscal Policies and Endogenous Growth


  • Park, Hyun

    () (Kyung-Hee University)


This paper studies the dynamic properties of an endogenous growth model in which government consumption and production services are financed by capital taxes. I generalize the existence and its stability property of commitment Ramsey equilibria when government spending is productive and taxation is distortionary. I then establish a sufficient condition for uniqueness of the (positive) balanced growth path and determinacy of transitional dynamics. The same sufficient condition ensures growth convergence in Barro-type endogenous fiscal policies. This modeling approach can be used by a large class of endogenous growth models which allow for market imperfections and optimal policies. In particular, a few implications for main results are discussed on economic integration.

Suggested Citation

  • Park, Hyun, 2005. "Dynamic Fiscal Policies and Endogenous Growth," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 347-365.
  • Handle: RePEc:ris:integr:0319

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    More about this item


    Optimal tax policy; Transitional dynamics; Determinacy; Growth convergence;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy


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