All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC
ralph lauren polo

 
Toshiki Tamai
 
''A note on fiscal policy, indeterminacy, and endogenous time preference''
( 2019, Vol. 39 No.1 )
 
 
This paper presents an endogenous growth model with productive public goods and an endogenous time preference. The time preference is positively associated with consumption and negatively affected by income. Fiscal policy not only directly influences macroeconomic equilibrium and therefore the dynamic stability of macroeconomic equilibria but also indirectly influences them via the endogenous time preference. The overall effect of productive public goods provides a strong externality that generates indeterminacies of the equilibrium growth paths. This study derives the sufficient condition for the indeterminacy and clarifies the relation between fiscal policy and indeterminacy. The results show that Barro's (1990) tax rule for growth and welfare maximization, which equals the output elasticity of productive public goods, attains its purpose and stabilization of the dynamic equilibrium under certain conditions.
 
 
Keywords: Fiscal policy; Indeterminacy; Endogenous time preference
JEL: Q4 - Energy: General
H5 - National Government Expenditures and Related Policies National Government Expenditures and Related Policies: General
 
Manuscript Received : Mar 16 2019 Manuscript Accepted : Mar 16 2019

  This abstract has been downloaded 55 times                The Full PDF of this paper has been downloaded 104260 times