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Taxation and fiscal expenditure in a growth model with endogenous fertility

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  • Sedgley, Norman
  • Elmslie, Bruce

Abstract

Most growth theorists agree that understanding the economics of innovation and technological change is central to understanding why some countries are richer and/or grow faster than other countries. The driving force behind recent developments in endogenous innovation models of growth is a desire to eliminate population scale effects. In the semi endogenous growth model growth becomes proportional to the exogenous population growth rate but invariant to policy. This paper makes population growth endogenous by modeling fertility along the lines of Barro and Becker (Fertility Choice in a Model of Economic Growth, 1989) and models an array of government policies to demonstrate how some policies can impact levels and growth rates in a scale free endogenous growth model. In the model government policies are categorized according to whether they have level effects only, level and growth effects, or no impact on levels and/or growth.

Suggested Citation

  • Sedgley, Norman & Elmslie, Bruce, 2015. "Taxation and fiscal expenditure in a growth model with endogenous fertility," Economics Discussion Papers 2015-35, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201535
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    More about this item

    Keywords

    policy effects on growth; endogenous population; public finance;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H0 - Public Economics - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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