Fiscal Policy in an Endogenous Growth Model with Public Capital and Pollution

18 Pages Posted: 23 Feb 2005

See all articles by Alfred Greiner

Alfred Greiner

Bielefeld University - Department of Business Administration and Economics

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Abstract

This paper studies the growth and welfare effects of fiscal policy in an endogenous growth model with public capital and environmental pollution. I assume that pollution is due to aggregate production, and that it does not have a direct effect on production but only reduces household utility. I study the growth effects of fiscal policy for the model on the balanced growth path, taking transition dynamics into account. I then analyse the welfare effects of fiscal policy along the balanced growth path. Finally, I show how the fiscal parameters must be set so that the competitive economy replicates the social optimum.

Suggested Citation

Greiner, Alfred, Fiscal Policy in an Endogenous Growth Model with Public Capital and Pollution. Available at SSRN: https://ssrn.com/abstract=671927

Alfred Greiner (Contact Author)

Bielefeld University - Department of Business Administration and Economics ( email )

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