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Panagiotis Tsintzos
''Public Investment Rules and Indeterminacy''
( 2012, Vol. 32 No.1 )
This paper examines the rise of indeterminacy when public investment fiscal rules are implemented. The framework employed by our analysis is the standard endogenous growth model with productive public capital. The government can choose to invest in infrastructure according to two different rules; one by simply indexing investment to a fixed proportion of output and another by indexing to taxes. For both scenarios we examine the existence of global and local indeterminacy and state the differences in dynamics of the two cases
Keywords: Fiscal Rules, Endogenous Growth, Indeterminacy
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
H3 - Fiscal Policies and Behavior of Economic Agents: General
Manuscript Received : Aug 13 2011 Manuscript Accepted : Jan 09 2012

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