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Ramsey Fiscal Policy and Endogenous Growth: A Comment

Author

Listed:
  • Jenn-hong Tang

    (Department of Economics, National Tsing-Hua University)

Abstract

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.

Suggested Citation

  • Jenn-hong Tang, 2010. "Ramsey Fiscal Policy and Endogenous Growth: A Comment," Economics Bulletin, AccessEcon, vol. 30(3), pages 2450-2456.
    • Handle: RePEc:ebl:ecbull:eb-09-00798
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    More about this item

    Keywords

    Fiscal Policy; Elastic Labor Supply; Growth;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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