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Fiscal Policy in a Model of Endogenous Growth With Learning By Doing

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  • Alfred Greiner

    (University of Augsburg)

Abstract

The goal of this article is to analyze the effects of fiscal pohcy on the steady state Abstract growth rate of an endogenous growth model, in which sustained per capita growth results from spillovers of investment in physical capital. In contrast to conventional models, however, it is assumed that investment at different dates has different weights concerning its contribution to the stock of human capital. With this assumption, it can be shown that the competitive economy may be characterized by a situation in which a decrease in the income tax rate or an increase in an investment subsidy always raises the growth rate, or by a situation with an optimal level for the income tax rate and investment subsidy, concerning maxtmum growth. Moreover, a nondis tortionary consumption tax does not influence balanced growth.

Suggested Citation

  • Alfred Greiner, 1996. "Fiscal Policy in a Model of Endogenous Growth With Learning By Doing," Public Finance Review, , vol. 24(3), pages 371-390, July.
    • Handle: RePEc:sae:pubfin:v:24:y:1996:i:3:p:371-390
    DOI: 10.1177/109114219602400304
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    References listed on IDEAS

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    1. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
    2. Alfred Greiner & Willi Semmler, 1996. "Multiple steady states, indeterminacy, and cycles in a basic model of endogenous growth," Journal of Economics, Springer, vol. 63(1), pages 79-99, February.
    3. David Levhari, 1966. "Extensions of Arrow's "Learning by Doing"," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 33(2), pages 117-131.
    4. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-472, June.
    5. Helpman, Elhanan, 1992. "Endogenous macroeconomic growth theory," European Economic Review, Elsevier, vol. 36(2-3), pages 237-267, April.
    6. Robert J. Barro & Xavier Sala-I-Martin, 1992. "Public Finance in Models of Economic Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(4), pages 645-661.
    7. Xavier Sala-i-Martin, 1990. "Lecture Notes on Economic Growth(II): Five Prototype Models of Endogenous Growth," NBER Working Papers 3564, National Bureau of Economic Research, Inc.
    8. repec:bla:scandj:v:95:y:1993:i:4:p:607-25 is not listed on IDEAS
    9. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    10. Judd, Kenneth L, 1985. "Short-run Analysis of Fiscal Policy in a Simple Perfect Foresight Model," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 298-319, April.
    11. Sala-i-Martin, Xavier, 1990. "Lecture Notes on Economic Growth: Five Prototype Models of Endogenous Growth. Volume II," Center Discussion Papers 321324, Yale University, Economic Growth Center.
    12. Harl E. Ryder & Geoffrey M. Heal, 1973. "Optimal Growth with Intertemporally Dependent Preferences," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(1), pages 1-31.
    13. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, April.
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    Cited by:

    1. Alfred Greiner, 1999. "Endogenous growth through externalities of investment: A different approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(1), pages 86-90, March.

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