A note on government spending on infrastructure in an endogenous growth model with finite horizon

Tanaka, Jumpei

doi:10.1016/s0148-6195(02)00121-2

Cited by 5 publications

(4 citation statements)

References 2 publications

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“…Therefore, the government size that maximizes growth and individual welfare in the competitive equilibrium market (i) is the same, and (ii) does not depend on the aggregate uncertainty. This implies that higher infrastructure expenditure is not always welfare improving (as already noticed by Rioja (1999)), and extends the result obtained in Mourmouras and Lee (1999) and Tanaka (2002) for insurable (individual) uncertainty OLG economies to aggregate uncertainty OLG economies.…”

supporting

confidence: 85%

“…Rivas (2003) assumes a perfect foresight two-period, OLG model in which the government finances three types of expenditure (infrastructure, consumption and transfers) by means of an income tax that treats labor and capital incomes differently, and finds that, regarding long-run growth rate, it is worse to finance expansions of government consumption with capital rather than labor income taxes. Mourmouras and Lee (1999) and Tanaka (2002) consider an OLG economy à la Blanchard (1985) with individual (insurable) lifetime uncertainty, but aggregate certainty, showing that the growthmaximizing government size also maximizes current and future generations' welfare. 1 The interested reader can find additional references, for instance, in the surveys by Munnell (1992), Button (1998) and Zagler and Dürnecker (2003) and, in a more recent article, the introduction in Agénor (2008).…”

Section: Introductionmentioning

confidence: 99%

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A Note on Infrastructure Expenditure, Uncertainty and Growth*

Echevarrı́a

2012

The Manchester School

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This note extends the Barro (Journal of Political Economy, Vol. 98 (1990), No. 5 part II, pp. S103–S125) model to a two‐period, OLG economy with aggregate uncertainty. We show that the government sizes maximizing average growth and individual welfare in a market economy coincide and are not affected by the introduction of uncertainty. The maximum average growth rate, however, does depend on the aggregate uncertainty, the individuals' risk aversion and how the intertemporal elasticity of substitution compares with one. Individual welfare is lower in the stochastic economy. Failing to include uncertainty overestimates the effect of changes in the government size.

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confidence: 85%

Section: Introductionmentioning

confidence: 99%

A Note on Infrastructure Expenditure, Uncertainty and Growth*

Echevarrı́a

2012

The Manchester School

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“…Lau (1995), Greiner and Hanusch (1998), Economides et al (2007), and Misch et al (2008) have analyzed the welfare and growth effects of fiscal policy in endogenous growth models. Mourmouras and Lee (1999) and Tanaka (2002) have examined the growth-maximizing effects of government spending on infrastructure in an OLG setup. 9.…”

Section: Notesmentioning

confidence: 99%

Endogenous Time Preference and Public Policy: Growth and Fiscal Implications

Dioikitopoulos

Kalyvitis

2010

Macroecon. Dynam.

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This paper studies the growth and fiscal policy implications of the assumption that public policy generates an externality in the individual rate of time preference through the aggregate public capital stock. We examine the competitive equilibrium properties and we solve for endogenous growth-maximizing fiscal policy. We investigate the behavior of the government size and the growth rate to the sensitivity of time preference to public capital and the magnitude of public capital externality on production. We find that the Barro taxation rule [Barro, Robert J., Journal of Political Economy 98 (1990), 103-125], which states that the elasticity of public capital in the production function should equal the government size, is suboptimal. We show that the government does not necessarily have to increase income taxation following a rise in public capital intensity because of the externality of public capital on time preference and, in turn, on growth and the tax base of the economy.

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“…2 2 See the works of Dasgupta (1999, 2001), Chen (2006), Tsoukis and Miller (2003), Chang (1999), Turnovsky (1997, 1996), Hu, Ohdoi, and Shimomura (2008), Ohdoi (2007), Greiner and Semmler (2000), Kalaitzidakis and Kalyvitis (2004), Baier and Glomm (2001), Yakita (2004), Shioji (2001), Tamai (2007), Burguet and Fernandez‐Ruiz (1998), Ghosh and Mourmouras (2002), Raurich‐Puigdevall (2000), Cazzavillan (1996), Zhang (2000), Neill (1996), Mourmouras and Lee (1999), Park and Philippopoulos (2002), Tanaka (2002), Chen and Lee (2007), etc. …”

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confidence: 99%

Public Expenditure, Environment, and Economic Growth

Barman

Gupta

2010

J Public Economic Theory

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This paper attempts to develop a model of endogenous growth with special consideration to the role of productive public expenditure in the presence of congestion effect of private capital and environmental pollution. We analyze the properties of the optimal fiscal policy in the steady-state equilibrium when the level of production of the final good is the source of emission. Government allocates its income tax revenue between pollution abatement expenditure and productive public expenditure. In the steady-state equilibrium, optimum ratio of productive public expenditure to national income is less than the competitive output share of the public input; and this ratio varies inversely with the magnitude of the emission-output coefficient. The steady-state equilibrium appears to be a saddle point; and the market economy growth rate is not necessarily less than the socially efficient growth rate in the steady-state equilibrium. Copyright � 2010 Wiley Periodicals, Inc..

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A note on government spending on infrastructure in an endogenous growth model with finite horizon

Cited by 5 publications

References 2 publications

A Note on Infrastructure Expenditure, Uncertainty and Growth*

A Note on Infrastructure Expenditure, Uncertainty and Growth*

Endogenous Time Preference and Public Policy: Growth and Fiscal Implications

Public Expenditure, Environment, and Economic Growth

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