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FiFo Discussion Papers, Finanzwissenschaftliches Forschungsinstitut, Universität Köln >
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http://hdl.handle.net/10419/27680
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| Title: | | A Golden Rule of Public Finance or a Fixed Deficit Regime? Growth and Welfare Effects of Budget Rules  |
| Authors: | | Groneck, Max |
| Issue Date: | | 2008 |
| Series/Report no.: | | Finanzwissenschaftliche Diskussionsbeiträge / Finanzwissenschaftliches Forschungsinstitut an der Universität zu Köln 08-7 |
| Abstract: | | In this paper, we compare growth and welfare e¤ects of various budget rules within an endogenous growth model with productive public capital, utility enhancing public consumption and public debt. We find that a fixed deficit regime does not affect the long run growth rate compared to a balanced budget while the growth rate is increased by a golden rule. Welfare effects are ambiguous. Simulations indicate that economies populated by households who have a strong tendency to smooth consumption should adhere to a balanced budget rather than a golden rule or a fixed deficit rule from a welfare point of view. |
| Subjects: | | Budget rules golden rule of public finance fiscal policy endogenous growth welfare |
| JEL: | | E62 H63 O40 H50 H62 |
| Document Type: | | Working Paper |
| Appears in Collections: | | FiFo Discussion Papers, Finanzwissenschaftliches Forschungsinstitut, Universität Köln
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