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Jenn-hong Tang
''Ramsey Fiscal Policy and Endogenous Growth: A Comment''
( 2010, Vol. 30 No.3 )
Recently, Park (2009, Economic Theory 39, 377--398) extended the Barro endogenous growth model (1990) by assuming that tax rate is optimally chosen by the government and labor supply is elastic. Park claimed to have proved the existence of multiple balanced growth paths that exhibit zero growth rate and local indeterminacy. In this comment, it is shown that his claim is incorrect. The model has a unique balanced growth path that may exhibit positive growth, and the model has no transitional dynamics.
Keywords: Fiscal Policy; Elastic Labor Supply; Growth
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
Manuscript Received : Dec 21 2009 Manuscript Accepted : Sep 20 2010

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