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Fiscal Policy, Home Production and Growth Dynamics

Author

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  • Hu, Yunfang
  • Mino, Kazuo

Abstract

Using an endogenous growth model with physical and human capital, we explore short-run as well as long-run effects of fiscal policy in the presence of households' production activities. We first show that our model has a unique balanced-growth path that satisfies saddlepoint stability. We then conduct fiscal policy experiments both in and out of the balanced-growth equilibrium. The main focus of the paper is to study the dynamic behavior of the model economy and the effects of fiscal actions analytically. In so doing, we examine how the presence of home production yields the policy implications that are different from those obtained in the standard setting that does not consider home production.

Suggested Citation

  • Hu, Yunfang & Mino, Kazuo, 2004. "Fiscal Policy, Home Production and Growth Dynamics," MPRA Paper 17017, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:17017
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    File URL: https://mpra.ub.uni-muenchen.de/17017/1/MPRA_paper_17017.pdf
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    References listed on IDEAS

    as
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    5. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    6. Bond, Eric W. & Wang, Ping & Yip, Chong K., 1996. "A General Two-Sector Model of Endogenous Growth with Human and Physical Capital: Balanced Growth and Transitional Dynamics," Journal of Economic Theory, Elsevier, vol. 68(1), pages 149-173, January.
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    More about this item

    Keywords

    fiscal policy; home production; multi-sector endogenous growth model.;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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