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Greiner Alfred and Anton Bondarev
''Public debt and aggregate stability with endogenous growth and a state-dependent consumption tax''
( 2015, Vol. 35 No.4 )
We analyze a basic endogenous growth model with public debt and a state-dependent consumption tax rate. We show that the balanced budget rule guarantees that the long-run growth path of the economy is unique and saddle point stable unless the tax rate is strongly regressive. In case of a strongly regressive consumption tax rate over a certain range, multiple balanced growth paths and local indeterminacy can arise.
Keywords: Balanced budget, public debt, stability, endogenous growth
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
H6 - National Budget, Deficit, and Debt: General
Manuscript Received : Jul 27 2015 Manuscript Accepted : Dec 13 2015

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