Public Debt and Economic Growth in Uzawa’s Two-Sector Model With Public Goods

Zhang, Wei‐Bin

doi:10.20472/es.2016.5.4.004

Cited by 3 publications

(3 citation statements)

References 26 publications

(29 reference statements)

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“…We base the model in this study the main features of Solow's growth model (Solow, 1956), Uzawa's two-sector growth model (Uzawa, 1961), and Zhang's model with endogenous growth and public goods (Zhang, 2016). In section 5 we conclude the study.…”

Section: The Solow-uzawa Model With Optimal Taxationmentioning

confidence: 98%

Optimal Taxation in the Solow-Uzawa Growth Model with Public Goods

Zhang

2020

JSDS

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This paper makes an original contribution to the literature of optimal taxation by introducing Ramseytaxation to the Solow-Uzawa growth model to examine genuine dynamic interdependence between growth andoptimal taxation. We introduce a public sector to the Uzawa two-sector growth model. The public sector suppliespublic goods and services. The government financially supports by the public sector by collecting taxes on thehousehold’s wage income and wealth income under the assumption that the utility level is maximized. We derivethe optimal taxation rule and construct the dynamics of the national economy. The model studies a nonlineardynamics between national and sectoral growth, economic structural change, wealth/capital accumulation, andoptimal tax rates in perfect competitive markets with the government intervention. The model has a uniquestable equilibrium point with the chosen parameter values. We carry out comparative dynamic analysis toanalyze effects of exogenous changes in a few parameters on the transitional process and long-term economicstructure of the economic dynamics.

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Section: The Solow-uzawa Model With Optimal Taxationmentioning

confidence: 98%

Optimal Taxation in the Solow-Uzawa Growth Model with Public Goods

Zhang

2020

JSDS

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“…The model is framed on the basic structure of the Solow-Uzawa two-sector neoclassical model (Solow, 1956;and Uzawa, 1961) and the Ramsey model with taxation (Ramsey, 1927). It also integrates an alternative approach to the public sector and the public goods (Zhang, 2016). This paper generalizes Zhang"s approach in that tax rates are considered endogenous variables like in the Ramsey model.…”

Section: The Solow-uzawa Growth Model With Taxes On Consumption Of Two Goodsmentioning

confidence: 99%

Ramsey Taxation in the Solow-Uzawa Growth Model with Public Goods

Zhang

2020

rope

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This paper examines issues related to optimal taxation similar to those addressed by Ramsey in his celebrated 1927 paper. Rather than determining taxes on commodities with given revenue to minimize the decrement of utility may be minimum in the Ramsey approach, this model determines optimal taxation to maximize utility with revenue as endogenous variable. We analyze optimal taxation in neoclassical growth theory. We introduce a public sector to the Solow-Uzawa neoclassical growth model. The economy is composed of the public, capital goods and consumer goods sectors. Public goods enter into the utility function. The public sector is financially supported by the government’s revenue from taxing consumption of capital goods and consumer goods. We derive the optimal taxation rule and construct the dynamics of the national economy. The model describes nonlinear dynamic interactions among national and sectoral growth, economic structural change, wealth/capital accumulation, and optimal tax rates in perfect competitive markets with the government intervention. We carry out comparative analysis to analyze effects of changes in some parameters on the tax rates and other economic variables.

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“…It should be mentioned that the model in this paper is also based on Zhang's two models. Zhang (2016) built a two-sector growth model on the basis of Diamond's wellknown growth model with debt. Zhang (2018) introduced endogenous health accumulation and a healthcare sector into the Solow one-sector growth model.…”

Section: Introductionmentioning

confidence: 99%

Economic Growth and Health Dynamics with Government Subsidies for Healthcare

Zhang¹

2018

AOP

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The aim of this paper is to examine the dynamic interdependence between wealth accumulation and health change with government health policy. The paper focuses on how government health policy affects health change, economic growth and the dynamics of government debt within a dynamic general equilibrium framework proposed by Zhang. Economic growth, health change and government debt dynamics are interrelated with different preferences and government health policy. After building the general equilibrium model, it is demonstrated that the movement of the economic system is provided by three nonlinear differential equations. We simulate the differential equations and show how the economic system moves from its initial state. A comparative dynamic analysis is conducted in order to examine how changes in some exogenous conditions affect short-run transitory processes and the equilibrium structure.

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Public Debt and Economic Growth in Uzawa’s Two-Sector Model With Public Goods

Abstract: Abstract:This paper studies public debt dynamics in a neoclassical growth model.

Cited by 3 publications

References 26 publications

Optimal Taxation in the Solow-Uzawa Growth Model with Public Goods

Optimal Taxation in the Solow-Uzawa Growth Model with Public Goods

Ramsey Taxation in the Solow-Uzawa Growth Model with Public Goods

Economic Growth and Health Dynamics with Government Subsidies for Healthcare

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