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Growth, Debt and Public Infrastructure

Author

Listed:
  • Thomas Krichel

    ()

  • Paul Levine

    () (University of Surrey)

Abstract

The paper presents a closed economy model of endogenous growth driven by capital externalities arising from both private capital and public infrastructure. The model is calibrated to fit data for India, an approxmiately closed economy. Simulations suggest that fiscal policy certainly matters and the choice of the income taxation rate, the mix of government spending between infrastructure and public consumption goods, and the long-run government debt/GDP ratio can all significantly affect the long-run growth rate. Intertemporal aspects of fiscal policy are also important and the precommitment and non-precommitment policies differ substantially.

Suggested Citation

  • Thomas Krichel & Paul Levine, 1994. "Growth, Debt and Public Infrastructure," School of Economics Discussion Papers 9404, School of Economics, University of Surrey.
  • Handle: RePEc:sur:surrec:9404
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    File URL: https://repec.som.surrey.ac.uk/archive/surrec9404.pdf
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    Cited by:

    1. OZDEMIR Durmus, "undated". "Growth, Infrastructure and Fiscal Policy," EcoMod2003 330700116, EcoMod.
    2. Patnaik, Ila & Pundit, Madhavi, 2014. "Is India's Long-Term Trend Growth Declining?," ADB Economics Working Paper Series 424, Asian Development Bank.
    3. Patnaik, Ila & Pundit, Madhavi, 2016. "Where is India's Growth Headed?," Working Papers 16/159, National Institute of Public Finance and Policy.

    More about this item

    Keywords

    endogenous growth; fiscal policy; time inconsistency.;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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