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Dynamic Aspect of Growth and Fiscal Policy

Krichel, T and Levine, P Dynamic Aspect of Growth and Fiscal Policy .

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Abstract

We develop an endogenous growth model driven by externalities of both private capital and public infrastructure. The government levies distortionary taxation to finance a publicly provided consumption good and public infrastructure. Firms face adjustment costs. We first study the steady state, focusing in detail on the non-Ricardian aspects of the model. We then examine the optimal and time-consistent policies in a linear-quadratic approximation of the model. Although the time consistent equilibrium is also sub-optimal in terms of steady-state welfare, it does yield higher growth, through an accumulation of assets by the state and a cut of government consumption.

Item Type: Other
Authors :
NameEmailORCID
Krichel, TUNSPECIFIEDUNSPECIFIED
Levine, Pp.levine@surrey.ac.ukUNSPECIFIED
Uncontrolled Keywords : C61, E21, E23, E62, O41, endogenous growth, fiscal policy, time inconsistency.
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:14
Last Modified : 17 May 2017 14:33
URI: http://epubs.surrey.ac.uk/id/eprint/818163

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