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Excludable and Non-excludable Public Inputs: Consequences for Economic Growth

Author

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  • Ingrid Ott

    () (Institute of Economics, University of Lüneburg)

  • Stephen J. Turnovsky

    () (Department of Economics, University of Washington)

Abstract

Many public goods are characterized by rivalry and/or excludability. This paper introduces both non-excludable and excludable public inputs into a simple endogenous growth model. We derive the equilibrium growth rate and design the optimal tax and user-cost structure. Our results emphasize the role of congestion in determining this optimal financing structure and the consequences this has in turn for the government’s budget. The latter consists of fee and tax revenues that are used to finance the entire public production input and that may or may not suffice to finance the entire public input, depending upon the degree of congestion. We extend the model to allow for monopoly pricing of the user fee by the government. Most of the analysis is conducted for general production functions consistent with endogenous growth, although the case of CES technology is also considered.

Suggested Citation

  • Ingrid Ott & Stephen J. Turnovsky, 2005. "Excludable and Non-excludable Public Inputs: Consequences for Economic Growth," Working Paper Series in Economics 2, University of Lüneburg, Institute of Economics.
  • Handle: RePEc:lue:wpaper:2
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    References listed on IDEAS

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    Cited by:

    1. Chandril Bhattacharyya, 2016. "A note on endogenous growth with public capital," Economics Bulletin, AccessEcon, vol. 36(4), pages 2506-2518.
    2. Economides, George & Park, Hyun & Philippopoulos, Apostolis, 2011. "How Should The Government Allocate Its Tax Revenues Between Productivity-Enhancing And Utility-Enhancing Public Goods?," Macroeconomic Dynamics, Cambridge University Press, vol. 15(03), pages 336-364, June.
    3. Benos, Nikos, 2009. "Fiscal policy and economic growth: empirical evidence from EU countries," MPRA Paper 19174, University Library of Munich, Germany.
    4. Manuel Gómez, 2016. "Factor substitution is an engine of growth in a model with productive public expenditure," Journal of Economics, Springer, vol. 117(1), pages 37-48, January.
    5. Schiffbauer, Marc, 2008. "Catching Up or Falling Behind? The Effect of Infrastructure Capital on Technology Adoption in Transition Economies," Papers DYNREG27, Economic and Social Research Institute (ESRI).
    6. Ingrid Ott & Susanne Soretz, 2006. "Governmental activity and private capital adjustment," Working Paper Series in Economics 26, University of Lüneburg, Institute of Economics.
    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. Pierre-Richard Agénor & Kyriakos C. Neanidis, 2014. "Optimal taxation and growth with public goods and costly enforcement," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(4), pages 425-454, June.
    9. Andreas Irmen & Johanna Kuehnel, 2009. "Productive Government Expenditure And Economic Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 692-733, September.
    10. George Economides & Apostolis Philippopoulos, 2012. "Are User Fees Really Regressive?," CESifo Working Paper Series 3875, CESifo Group Munich.
    11. Chetan Ghate & Gerhard Glomm & Jialu Liu Streeter, 2016. "Sectoral Infrastructure Investments in an Unbalanced Growing Economy: The Case of Potential Growth in India," Asian Development Review, MIT Press, vol. 33(2), pages 144-166, September.
    12. Hsun Chu & Ching-Chong Lai & Chu-Chuan Cheng, 2015. "Tax Havens, Growth, and Welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(6), pages 802-823, December.
    13. Dimitrios PAPARAS & Christian RICHTER & Alexandros PAPARAS, 2015. "Fiscal Policy and Economic Growth, Empirical Evidence in European Union," Turkish Economic Review, KSP Journals, vol. 2(4), pages 239-268, December.
    14. Ingrid Ott & Susanne Soretz, 2006. "Nachhaltige Entwicklung durch endogeneUmweltwahrnehmung," Working Paper Series in Economics 24, University of Lüneburg, Institute of Economics.
    15. Ingrid Ott & Susanne Soretz, 2006. "Regional growth strategies: fiscal versus institutional governmental policies," Working Paper Series in Economics 30, University of Lüneburg, Institute of Economics.
    16. Calderon, Cesar & Serven, Luis, 2014. "Infrastructure, growth, and inequality : an overview," Policy Research Working Paper Series 7034, The World Bank.
    17. Dimitrios Paparas & Christian Richter, 2015. "Fiscal policy and economic growth: Empirical evidence from the European Union," Working Papers 2015.06, International Network for Economic Research - INFER.
    18. Mihaela Pintea & Stephen Turnovsky, 2006. "Congestion and Fiscal Policy in a Two-Sector Economy with Public Capital: A Quantitative Assessment," Computational Economics, Springer;Society for Computational Economics, vol. 28(2), pages 177-209, September.
    19. Chatterjee, Santanu & Mahbub Morshed, A.K.M., 2011. "Infrastructure provision and macroeconomic performance," Journal of Economic Dynamics and Control, Elsevier, vol. 35(8), pages 1288-1306, August.
    20. repec:eee:poleco:v:48:y:2017:i:c:p:91-103 is not listed on IDEAS
    21. George Economides & Apostolis Philippopoulos & Stelios Sakkas, 2016. "Tuition Fees, as User Prices, and Private Incentives," CESifo Working Paper Series 5991, CESifo Group Munich.
    22. Altar, Moisa & Necula, Ciprian & Bobeica, Gabriel, 2008. "Modeling The Economic Growth In Romania. The Influence Of Fiscal Regimes," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(4), pages 146-160, December.
    23. Bishnu, Monisankar & Ghate, Chetan & Gopalakrishnan, Pawan, 2016. "Factor income taxation, growth, and investment specific technological change," Economic Modelling, Elsevier, vol. 57(C), pages 133-152.
    24. Chatterjee, Santanu & Mahbub Morshed, A.K.M., 2011. "Reprint to: Infrastructure provision and macroeconomic performance," Journal of Economic Dynamics and Control, Elsevier, vol. 35(9), pages 1405-1423, September.
    25. Chetan Ghate & Gerhard Glomm & Jialu Liu, 2012. "Sectoral infrastructure investment in an unbalanced growing economy: The Case of India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 12-07, Indian Statistical Institute, New Delhi, India.

    More about this item

    Keywords

    Excludable and Non-excludable Public Goods; Congestion; Growth;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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