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Fiscal Policy in a Model of Endogenous Growth With Learning By Doing

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  • Alfred Greiner

    (University of Augsburg)

Abstract

The goal of this article is to analyze the effects of fiscal pohcy on the steady state Abstract growth rate of an endogenous growth model, in which sustained per capita growth results from spillovers of investment in physical capital. In contrast to conventional models, however, it is assumed that investment at different dates has different weights concerning its contribution to the stock of human capital. With this assumption, it can be shown that the competitive economy may be characterized by a situation in which a decrease in the income tax rate or an increase in an investment subsidy always raises the growth rate, or by a situation with an optimal level for the income tax rate and investment subsidy, concerning maxtmum growth. Moreover, a nondis tortionary consumption tax does not influence balanced growth.

Suggested Citation

  • Alfred Greiner, 1996. "Fiscal Policy in a Model of Endogenous Growth With Learning By Doing," Public Finance Review, , vol. 24(3), pages 371-390, July.
    • Handle: RePEc:sae:pubfin:v:24:y:1996:i:3:p:371-390
    DOI: 10.1177/109114219602400304
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    References listed on IDEAS

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    1. 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.
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    Cited by:

    1. Alfred Greiner, 1999. "Endogenous growth through externalities of investment: A different approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(1), pages 86-90, March.

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