Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27680
Authors: 
Year of Publication: 
2008
Series/Report no.: 
FiFo-CPE Discussion Paper No. 08-7
Publisher: 
Finanzwissenschaftliches Forschungsinstitut an der Universität zu Köln (FiFo Köln), Köln
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

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