Public Investment Rules and Indeterminacy

Panagiotis Tsintzos

Economics Bulletin, 2012, vol. 32, issue 1, 7-15

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

Keywords: Fiscal Rules; Endogenous Growth; Indeterminacy (search for similar items in EconPapers)
JEL-codes: E6 H3 (search for similar items in EconPapers)
Date: 2012-01-09
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