DEBT POLICY RULE, PRODUCTIVE GOVERNMENT SPENDING, AND MULTIPLE GROWTH PATHS
This paper constructs an endogenous growth model with productive government spending. In this model, the government can finance its costs through income tax and government debt and has a target level of government debt relative to the size of the economy. We show that there are two steady states. On...
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| Veröffentlicht in: | Macroeconomic dynamics 2008-09, Vol.12 (4), p.445-462 |
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| creator | Futagami, Koichi Iwaisako, Tatsuro Ohdoi, Ryoji |
| description | This paper constructs an endogenous growth model with productive government spending. In this model, the government can finance its costs through income tax and government debt and has a target level of government debt relative to the size of the economy. We show that there are two steady states. One is associated with high growth and the other with low growth. It is also shown that whether the government uses income taxes or government bonds makes the results differ significantly. In particular, an increase in government bonds reduces the growth rate in the high-growth steady state and raises the growth rate in the low-growth steady state. Conversely, an increase in the income tax rate reduces the growth rate in the low-growth steady state and there exists some tax rate that maximizes the growth rate in the high-growth steady state. Finally, the level of welfare in the low-growth steady state is lower than that in the high-growth steady state. |
| doi_str_mv | 10.1017/S1365100508070235 |
| format | Article |
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In this model, the government can finance its costs through income tax and government debt and has a target level of government debt relative to the size of the economy. We show that there are two steady states. One is associated with high growth and the other with low growth. It is also shown that whether the government uses income taxes or government bonds makes the results differ significantly. In particular, an increase in government bonds reduces the growth rate in the high-growth steady state and raises the growth rate in the low-growth steady state. Conversely, an increase in the income tax rate reduces the growth rate in the low-growth steady state and there exists some tax rate that maximizes the growth rate in the high-growth steady state. Finally, the level of welfare in the low-growth steady state is lower than that in the high-growth steady state.</description><identifier>ISSN: 1365-1005</identifier><identifier>EISSN: 1469-8056</identifier><identifier>DOI: 10.1017/S1365100508070235</identifier><language>eng</language><publisher>New York, USA: Cambridge University Press</publisher><subject>Budgets ; Deficit financing ; Developing countries ; Economic growth ; Economic indicators ; Economic theory ; Equilibrium ; Expenditures ; Government bonds ; Government spending ; Growth models ; Households ; Income taxes ; LDCs ; Macroeconomics ; Market equilibrium ; National debt ; Public services ; Studies ; Tax cuts ; Tax rates</subject><ispartof>Macroeconomic dynamics, 2008-09, Vol.12 (4), p.445-462</ispartof><rights>Copyright © Cambridge University Press 2008</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c536t-7804c2046e211c8a6c01650e04cdc232efead15fa1d60385cbb0ee7e0a72a6d93</citedby><cites>FETCH-LOGICAL-c536t-7804c2046e211c8a6c01650e04cdc232efead15fa1d60385cbb0ee7e0a72a6d93</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://www.cambridge.org/core/product/identifier/S1365100508070235/type/journal_article$$EHTML$$P50$$Gcambridge$$H</linktohtml><link.rule.ids>164,314,780,784,27924,27925,55628</link.rule.ids></links><search><creatorcontrib>Futagami, Koichi</creatorcontrib><creatorcontrib>Iwaisako, Tatsuro</creatorcontrib><creatorcontrib>Ohdoi, Ryoji</creatorcontrib><title>DEBT POLICY RULE, PRODUCTIVE GOVERNMENT SPENDING, AND MULTIPLE GROWTH PATHS</title><title>Macroeconomic dynamics</title><addtitle>Macroecon. Dynam</addtitle><description>This paper constructs an endogenous growth model with productive government spending. In this model, the government can finance its costs through income tax and government debt and has a target level of government debt relative to the size of the economy. We show that there are two steady states. One is associated with high growth and the other with low growth. It is also shown that whether the government uses income taxes or government bonds makes the results differ significantly. In particular, an increase in government bonds reduces the growth rate in the high-growth steady state and raises the growth rate in the low-growth steady state. Conversely, an increase in the income tax rate reduces the growth rate in the low-growth steady state and there exists some tax rate that maximizes the growth rate in the high-growth steady state. Finally, the level of welfare in the low-growth steady state is lower than that in the high-growth steady state.</description><subject>Budgets</subject><subject>Deficit financing</subject><subject>Developing countries</subject><subject>Economic growth</subject><subject>Economic indicators</subject><subject>Economic theory</subject><subject>Equilibrium</subject><subject>Expenditures</subject><subject>Government bonds</subject><subject>Government spending</subject><subject>Growth models</subject><subject>Households</subject><subject>Income taxes</subject><subject>LDCs</subject><subject>Macroeconomics</subject><subject>Market equilibrium</subject><subject>National debt</subject><subject>Public services</subject><subject>Studies</subject><subject>Tax cuts</subject><subject>Tax rates</subject><issn>1365-1005</issn><issn>1469-8056</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2008</creationdate><recordtype>article</recordtype><sourceid>8G5</sourceid><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>AZQEC</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><sourceid>GNUQQ</sourceid><sourceid>GUQSH</sourceid><sourceid>M2O</sourceid><recordid>eNp1UM9PgzAUbowmzukf4K3xPPSV0lKOE-pGZEBYmfFEOihmi3MTtoP_vV3cwcR4ei_v-_XyIXRL4J4A8R_mhHJGABgI8MGl7AwNiMcDRwDj53a3sHPEL9FV368BCKduMEDPkXxUOM-SOHzFRZnIEc6LLCpDFS8knmQLWaQzmSo8z2UaxelkhMdphGdlouI8sYwie1FTnI_VdH6NLlr93pub0xyi8kmqcOok2SQOx4lTM8r3ji_Aq13wuHEJqYXmtX2GgbHXpnapa1qjG8JaTRoOVLB6uQRjfAPadzVvAjpEdz--u277eTD9vlpvD92HjaxIIHjgBeJIIj-kutv2fWfaatetNrr7qghUx8qqP5VZDT1p9GbZrZo388v5X9U3thdl2Q</recordid><startdate>20080901</startdate><enddate>20080901</enddate><creator>Futagami, Koichi</creator><creator>Iwaisako, Tatsuro</creator><creator>Ohdoi, Ryoji</creator><general>Cambridge University Press</general><scope>AAYXX</scope><scope>CITATION</scope><scope>0U~</scope><scope>1-H</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>8FK</scope><scope>8FL</scope><scope>8G5</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>AZQEC</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FRNLG</scope><scope>F~G</scope><scope>GNUQQ</scope><scope>GUQSH</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>L.0</scope><scope>M0C</scope><scope>M2O</scope><scope>MBDVC</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope></search><sort><creationdate>20080901</creationdate><title>DEBT POLICY RULE, PRODUCTIVE GOVERNMENT SPENDING, AND MULTIPLE GROWTH PATHS</title><author>Futagami, Koichi ; Iwaisako, Tatsuro ; Ohdoi, Ryoji</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c536t-7804c2046e211c8a6c01650e04cdc232efead15fa1d60385cbb0ee7e0a72a6d93</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2008</creationdate><topic>Budgets</topic><topic>Deficit financing</topic><topic>Developing countries</topic><topic>Economic growth</topic><topic>Economic indicators</topic><topic>Economic theory</topic><topic>Equilibrium</topic><topic>Expenditures</topic><topic>Government bonds</topic><topic>Government spending</topic><topic>Growth models</topic><topic>Households</topic><topic>Income taxes</topic><topic>LDCs</topic><topic>Macroeconomics</topic><topic>Market equilibrium</topic><topic>National debt</topic><topic>Public services</topic><topic>Studies</topic><topic>Tax cuts</topic><topic>Tax rates</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Futagami, Koichi</creatorcontrib><creatorcontrib>Iwaisako, Tatsuro</creatorcontrib><creatorcontrib>Ohdoi, Ryoji</creatorcontrib><collection>CrossRef</collection><collection>Global News & ABI/Inform Professional</collection><collection>Trade PRO</collection><collection>ProQuest Central (Corporate)</collection><collection>Access via ABI/INFORM (ProQuest)</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>Research Library (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>ProQuest Central Essentials</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>Business Premium Collection (Alumni)</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>ProQuest Central Student</collection><collection>Research Library Prep</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Professional Standard</collection><collection>ABI/INFORM Global</collection><collection>Research Library</collection><collection>Research Library (Corporate)</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central Basic</collection><jtitle>Macroeconomic dynamics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Futagami, Koichi</au><au>Iwaisako, Tatsuro</au><au>Ohdoi, Ryoji</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>DEBT POLICY RULE, PRODUCTIVE GOVERNMENT SPENDING, AND MULTIPLE GROWTH PATHS</atitle><jtitle>Macroeconomic dynamics</jtitle><addtitle>Macroecon. Dynam</addtitle><date>2008-09-01</date><risdate>2008</risdate><volume>12</volume><issue>4</issue><spage>445</spage><epage>462</epage><pages>445-462</pages><issn>1365-1005</issn><eissn>1469-8056</eissn><abstract>This paper constructs an endogenous growth model with productive government spending. In this model, the government can finance its costs through income tax and government debt and has a target level of government debt relative to the size of the economy. We show that there are two steady states. One is associated with high growth and the other with low growth. It is also shown that whether the government uses income taxes or government bonds makes the results differ significantly. In particular, an increase in government bonds reduces the growth rate in the high-growth steady state and raises the growth rate in the low-growth steady state. Conversely, an increase in the income tax rate reduces the growth rate in the low-growth steady state and there exists some tax rate that maximizes the growth rate in the high-growth steady state. Finally, the level of welfare in the low-growth steady state is lower than that in the high-growth steady state.</abstract><cop>New York, USA</cop><pub>Cambridge University Press</pub><doi>10.1017/S1365100508070235</doi><tpages>18</tpages></addata></record> |
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| subjects | Budgets Deficit financing Developing countries Economic growth Economic indicators Economic theory Equilibrium Expenditures Government bonds Government spending Growth models Households Income taxes LDCs Macroeconomics Market equilibrium National debt Public services Studies Tax cuts Tax rates |
| title | DEBT POLICY RULE, PRODUCTIVE GOVERNMENT SPENDING, AND MULTIPLE GROWTH PATHS |
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