Fiscal Policy In An Endogenous Growth Model With Public Capital
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| Author | : Alfred Greiner |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2013 |
| Genre | : |
| ISBN | : |
This paper studies growth and welfare effects of fiscal policy in an endogenous growth model with productive public capital where we consider both distortionary and non-distortionary taxation in the model simultaneously. Analyzing the model it is assumed that the economy originally is on the balanced growth path when the government changes its fiscal parameters. The paper then studies growth and welfare effects of varying fiscal parameters both for the balanced growth path as well as for the economy on the transition path. It is demonstrated that the long-run effects may be different from effects on the transition path. Further, economic conditions explaining the results are presented.
| Author | : Bassam Awad |
| Publisher | : LAP Lambert Academic Publishing |
| Total Pages | : 164 |
| Release | : 2010-12 |
| Genre | : |
| ISBN | : 9783843381253 |
This book addresses three questions that are central to the analysis of fiscal policy. First, how good are linearization and higher-order approximations in an endogenous growth model with public capital? Second, how important are the transitional dynamics in assessing fiscal policy alternatives when comparing the long-run economic growth and welfare? Third, is a consumption tax optimal in an economy with public and private human capital when the tax structure is time-invariant? To answer these questions, I have used an endogenous growth model where the growth is driven by accumulation of human capital and fueled by a public capital externality. I conclude: (i) the policies that involve the highest rates of economic growth do not always provide the highest welfare; (ii) the traditional methods used to analyze the impact of tax policy alternatives might involve significant approximation errors, and the use of actual transitional path in analyzing fiscal policy in this book eliminates this problem; and (iv) the long-run welfare benefits of fiscal policy reform may take years to be realized, with welfare losses accruing in the short-run.
| Author | : Alfred Greiner |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2013 |
| Genre | : |
| ISBN | : |
In this paper we study growth and welfare effects of fiscal policy in an endogenous growth model with public capital and environmental pollution. As to pollution we assume that it is due to aggregate production. Pollution does not have direct effects as concerns production possibilities but it only reduces utility of the household. The paper then studies growth effects of fiscal policy for the model on the balanced growth path and taking into account transition dynamics. Further, welfare effects of fiscal policy are analyzed and it is demonstrated that the growth maximizing values of tax rates may be different from those values which maximize the long run balanced growth rate.
| Author | : Mr.Paul Cashin |
| Publisher | : International Monetary Fund |
| Total Pages | : 36 |
| Release | : 1994-08-01 |
| Genre | : Business & Economics |
| ISBN | : 1451951477 |
This paper develops an endogenous growth model of the influence of public investment, public transfers, and distortionary taxation on the rate of economic growth. The growth-enhancing effects of investment in public capital and transfer payments are modeled, as is the growth-inhibiting influence of the levying of distortionary taxes which are used to fund such expenditure. The theoretical implications of the model are then tested with data from 23 developed countries between 1971 and 1988, and time series cross sectional results are obtained which support the proposed influence of the public finance variables on economic growth.
| Author | : Alfred Greiner |
| Publisher | : |
| Total Pages | : 268 |
| Release | : 1996 |
| Genre | : Business & Economics |
| ISBN | : |
This work analyzes the impact of fiscal policy on the growth rate of market economies. Two frameworks are considered: in the first, human capital is seen as a by-product of gross investment; in the second, government is seen to influence growth by investing in public capital.
| Author | : Willi Semmler |
| Publisher | : World Bank Publications |
| Total Pages | : 36 |
| Release | : 2007 |
| Genre | : Access to Finance |
| ISBN | : |
Abstract: This paper responds to the development policy debate involving the World Bank and the IMF on the use of fiscal policy not only for economic stabilization but also to promote economic growth and increase per capita income. A key issue in this debate relates to the effect of the composition of public expenditure on economic growth. Policy makers and some researchers have argued that expenditure on growth-enhancing functions could enhance future revenue and justify the provision of "fiscal space" in the budget. But there are no simple ways to identify the growth-maximizing composition of public expenditure. The current paper lays out a research strategy to explore the effects of fiscal policy, including the composition of public expenditure, on economic growth, using a time series approach. Based on the modeling strategy of Greiner, Semmler and Gong (2005) we develop a general model that features a government that undertakes public expenditure on (a) education and health facilities which enhance human capital, (b) public infrastructure such as roads and bridges necessary for market activity, (c) public administration to support government functions, (d) transfers and public consumption facilities, and (e) debt service. The proposed model is numerically solved, calibrated and the impact of the composition of public expenditure on the long-run per capita income explored for low-, lower-middle- and upper-middle-income countries. Policy implications and practical policy rules are spelled out, the extension to an estimable model indicated, a debt sustainability test proposed, and the out-of-steady-state dynamics studied.
| Author | : Bin Xu |
| Publisher | : International Monetary Fund |
| Total Pages | : 40 |
| Release | : 1994-03-01 |
| Genre | : Business & Economics |
| ISBN | : 1451977557 |
This paper surveys the tax policy implications in various endogenous growth models. The focus is on the long-run growth effects of income, consumption, and investment taxation in models whose engine of growth is the accumulation of human capital, technological innovation, and/or public infrastructure. The results depend on model specifications. This paper also reviews quantitative results from cross-country regressions and simulations, and indicates some statistical and methodological problems to which they are subject. Tax policy implications in endogenous growth models both with tax policy endogenously determined by a political process and with international capital mobility are also discussed.
| Author | : Mr.Gian Milesi-Ferretti |
| Publisher | : International Monetary Fund |
| Total Pages | : 37 |
| Release | : 1994-07-01 |
| Genre | : Business & Economics |
| ISBN | : 145184994X |
This paper examines the effects of taxation of human capital, physical capital and foreign assets in a multi-sector model of endogenous growth. It is shown that in general the growth rate is reduced by taxes on capital and labor (human capital) income. When the government faces no borrowing constraints and is able to commit to a given set of present and future taxes, it is shown that the optimal tax plan involves high taxation of both capital and labor in the short run. This allows the government to accumulate sufficient assets to finance spending without any recourse to distortionary taxation in the long run. When restrictions to government borrowing and lending are imposed, the model implies that human and physical capital should be taxed similarly.
| Author | : Alfred Greiner |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2012 |
| Genre | : |
| ISBN | : |
In this article we present an endogenous growth model with productive public investment in infrastructure capital. Further, we suppose that the government pays lump-sum transfers to the household and subsidizes private investment. First, we demonstrate that there exists a unique balanced growth path which is a saddle point. Then, we study growth and welfare effects of fiscal policy along the balanced growth path. In particular, we derive the growth maximizing income tax rate and study how that variable depends on other fiscal parameters. Further, growth effects of varying the investment subsidy rate and of transfer payments are also analyzed. In addition, we demonstrate that growth and welfare maximization generally are not equivalent goals in a second best environment.
| Author | : Alfred Greiner |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 148 |
| Release | : 2009-07-24 |
| Genre | : Business & Economics |
| ISBN | : 3642017452 |
Starting point of this book is the observation that an increase in public debt must be accompanied by a rise in the primary surplus of the government to guarantee sustainability of public debt. The book first elaborates on that principle from a theoretical point of view and then tests whether empirical evidence for that rule can be found. Additional tests are implemented to gain further evidence on sustainability of public debt. In order to allow for time varying coefficients penalized spline estimations are performed. The theoretical chapters present endogenous growth models and assume that the primary surplus rises as public debt increases so that sustainability of public debt is given. Implications of public deficits and debt are studied assuming full employment and for unemployment. The conclusion summarizes the findings and compares the results of the different models. Finally, policy implications are given showing how governments should deal with high public debt to GDP ratios.
