Government spending composition, aggregate demand, growth, and distribution

Daniele Tavani and Luca Zamparelli

Review of Keynesian Economics, 2017, vol. 5, issue 2, 239-258

Abstract: We study a demand-driven growth and distribution model with a public sector, both without and with government debt. Government spending is used to finance the accumulation of public capital and to pay wages to public employees. The interaction between public capital and induced technical change makes long-run growth: (i) hump-shaped in the composition of government spending, (ii) wage-led, and (iii) government-spending-led. Provided that the interest rate on government bonds is kept below the growth rate, the size of government debt is irrelevant for long-run growth.

Keywords: Keynesian growth; government spending composition; factor shares; fiscal policy (search for similar items in EconPapers)
JEL-codes: E12 E25 E62 H50 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.elgaronline.com/abstract/journals/roke/5-2/roke.2017.02.06.xml (application/pdf)
Restricted access

Related works:
Working Paper: Governement Spending Composition, Aggregate Demand, Growth and Distribution (2015)
Working Paper: Government Spending Composition, Aggregate Demand, Growth and Distribution (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:rokejn:v:5:y:2017:i:2:p239-258

Access Statistics for this article

Review of Keynesian Economics is currently edited by Thomas Palley, Matías Vernengo and Esteban Pérez Caldentey

More articles in Review of Keynesian Economics from Edward Elgar Publishing
Bibliographic data for series maintained by Phillip Thompson ().