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Public Investment Rules and Indeterminacy

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  • Panagiotis Tsintzos

    (Democritus University of Thrace Department of International Economic Relations and Development)

Abstract

This paper examines the rise of indeterminacy when public investment fiscal rules are implemented. The framework employed by our analysis is the standard endogenous growth model with productive public capital. The government can choose to invest in infrastructure according to two different rules; one by simply indexing investment to a fixed proportion of output and another by indexing to taxes. For both scenarios we examine the existence of global and local indeterminacy and state the differences in dynamics of the two cases

Suggested Citation

  • Panagiotis Tsintzos, 2012. "Public Investment Rules and Indeterminacy," Economics Bulletin, AccessEcon, vol. 32(1), pages 7-15.
    • Handle: RePEc:ebl:ecbull:eb-11-00563
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Fiscal Rules; Endogenous Growth; Indeterminacy;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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