Fiscal Settings and the Steady State Growth Path

Kim M. Hawtrey ()

The Economic Record, 1995, vol. 71, issue 215, pages 354-66

Abstract: This paper outlines how deficit-neutral fiscal settings, via their impact on the growth/distribution equation, can play a positive role in minimizing deviant macroeconomic performance. The conventional Solow-Swan model of economic growth assigns no role to the standard instruments of fiscal policy in influencing the equilibrium growth path. In the model presented here, government fiscal policy--in the form of tax and transfer rates--is shown to have real effects on the long-term growth path of the unionized macroeconomy, even when the budget is permanently balanced and policy is fully announced. Copyright 1995 by The Economic Society of Australia.

Date: 1995

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Persistent link: http://EconPapers.repec.org/RePEc:bla:ecorec:v:71:y:1995:i:215:p:354-66

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