Indeterminacy in a two-sector endogenous growth model with productive government spending

Hu, Yunfang; Ohdoi, Ryoji; Shimomura, Koji

doi:10.1016/j.jmacro.2007.07.009

Cited by 16 publications

(11 citation statements)

References 13 publications

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“…In particular, we analytically show that the relationship between indeterminacy and 1 See, for example, Jones and Manuelli (1990), King and Rebelo (1990), Rebelo (1991), Pecorino (1993), Hendricks (2001), Song (2002), and Jonsson (2007). Existing studies that consider constant income taxation and useful public expenditures include Barro (1990), Barro and Sala-i-Martin (1992), Futagami, Morita, and Shibata (1993), Ravikumar (1994, 1997), Cazzavillan (1996), Turnovsky (1996Turnovsky ( , 1997Turnovsky ( , 1999, Zhang (2000), Baier and Glomm (2001), Palivos, Yip, and Zhang (2003), Chen (2006), Greiner (2007), and Hu, Ohdoi, and Shimomura (2008), among others. 2 Yamarik (2001) analyzes the distortionary growth implications of a non-linear tax schedule in a one-sector AK model of endogenous growth with useless government spending.…”

Section: Introductionmentioning

confidence: 88%

On indeterminacy and growth under progressive taxation and productive government spending

Chen

Guo

2013

Canadian J of Economics

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This paper examines the theoretical interrelations between equilibrium (in)determinacy and economic growth in a one-sector representative-agent model of endogenous growth with progressive taxation of income and productive ‡ow of public spending. We analytically show that if the demand-side e¤ect of government purchases is weaker, the economy exhibits an indeterminate balanced-growth equilibrium and belief-driven growth ‡uctua-tions when the tax schedule is regressive or su¢ ciently progressive. If the supply-side e¤ect of public expenditures is weaker, indeterminacy and sunspots arise under progressive income taxation. In sharp contrast to Keynesian-type stabilization policies, our analysis …nds that raising the tax progressivity may destabilize an endogenously growing economy with ‡uctuations driven by agents'self-ful…lling expectations.

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Section: Introductionmentioning

confidence: 88%

On indeterminacy and growth under progressive taxation and productive government spending

Chen

Guo

2013

Canadian J of Economics

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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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“…Another important issue this paper addresses is how government's spending affects economic growth, trade pattern, and wealth and income distributions (Barro, 1990;Turnovsky, 2000Turnovsky, , 2004. We are especially concerned with progressive income taxation (e.g., Glomm and Ravikumar, 1997;Agénor, 2011;Baier and Glomm, 2001;Palivos et al, 2003;Greiner, 2007;Hu et al, 2008;andGuo, 2013, 2014). This paper deviates from traditional approaches by applying Zhang's concept of disposable income and utility function (Zhang, 1993(Zhang, , 2005.…”

Section: Introductionmentioning

confidence: 99%

International Development and Nonlinear Taxation in a Multi-Country Neoclassical Growth Model

Zhang¹

2018

MER

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This paper builds a multi-country growth model with nonlinear taxation and public goods. The dynamic machines of global development are national wealth accumulation and free trade. Different from most of theoretical growth models in neoclassical economics which deals with a two-country world and each economy has a homogeneous population, our model deals with any number of national economies and each economy has heterogeneous populations. A national economy consists of one industrial sector and one public sector and has any number of types of people. Our model integrates economic mechanisms of some well-known economic theories in a comprehensive framework. Each national economy is described according to Walrasian general economic theory. Capital accumulation follows the Solow model. Modelling public goods with nonlinear taxation is based on the literature of progressive taxation and economic growth. The trade pattern is modelled within the Oniki-Uzawa global growth model with two countries. We model household behavior on the basis of Zhang's concept of disposable income and utility function. We simulate the model to show transitory processes and long-term equilibrium. We carry out comparative dynamic analysis in some parameters.

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Indeterminacy in a two-sector endogenous growth model with productive government spending

Cited by 16 publications

References 13 publications

On indeterminacy and growth under progressive taxation and productive government spending

On indeterminacy and growth under progressive taxation and productive government spending

Public Expenditure, Environment, and Economic Growth

International Development and Nonlinear Taxation in a Multi-Country Neoclassical Growth Model

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