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Title:Fiscal Policy and Growth with Complementarities and Constraints on Government PDF Logo
Authors:Misch, Florian
Gemmell, Norman
Kneller, Richard Anthony
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Fiscal Policy and the Business Cycle E6-V2
Abstract:This paper considers the implications of complementarity in private production and constraints on government for optimal fiscal policy. Using an endogenous growth model with public finance, it derives three central results which modify findings in the literature under standard assumptions. First, it shows that optimal public spending composition and taxation are interrelated so that first- and second-best…fiscal policies differ. Second, it shows that the growth-maximizing fiscal policy is affected by preference parameters. Third, it shows that with budget rigidities and informational limitations, knowledge about the optimal fiscal policy parameter values is not necessary for growth-enhancing fiscal policy adjustments.
Subjects:Imperfect Knowledge
Economic Growth
Productive Public Spending
Optimal Fiscal Policy
JEL:E62
H21
O40
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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