A Model of Economic Growth with Public Finance: Dynamics and Analytic Solution

Oliviero Carboni and P. Russu

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract: This paper studies the equilibrium dynamics of a growth model with public finance where two different allocations of public resources are considered. The model simultaneously determines the optimal shares of consumption, capital accumulation, taxes and composition of the two different public expenditures which maximize a representative household s lifetime utilities in a centralized economy. The analysis supplies a closed form solution. Moreover, with one restriction on the parameters (α=σ) we fully determine the solutions path for all variables of the model and determine the conditions for balanced growth.

Keywords: growth models; fiscal policy; public spending composition (search for similar items in EconPapers)
JEL-codes: E13 H20 H50 O40 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-dge, nep-fdg, nep-pbe and nep-pub
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https://crenos.unica.it/crenos/sites/default/files/WP12-29.pdf (application/pdf)

Related works:
Journal Article: A Model of Economic Growth with Public Finance: Dynamics and Analytic Solution (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cns:cnscwp:201229

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