Economic Growth and Fiscal Policy

Toshihiro Ihori
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Toshihiro Ihori: National Gradual Institute for Policy Studies

Chapter 5 in Principles of Public Finance, 2017, pp 101-137 from Springer

Abstract: Abstract In the short-run macroeconomic model, investment is an important component of aggregate demand. Certainly, investment is a part of current effective demand. At the same time, it may increase production capacity by accumulating capital stock in the long run. This is an important function of public investment. It is also useful to investigate the impact of taxes on economic growth, since public investment is normally financed by taxes and an increase in taxes in the private sector depresses private investment. Thus, in this chapter, we investigate the supply-side effect of public investment and the impact of fiscal policy on long-run economic growth.

Keywords: Long-run growth rate; Optimal public investment; Marginal productivity of public investment; Rate of time preference; Discount rate of public investment; Solow model; Endogenous growth model; Kuznetz hypothesis (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-981-10-2389-7_5

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DOI: 10.1007/978-981-10-2389-7_5

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