Growth, Congestion of Public Goods, and Second-Best Optimal Policy

Romano Piras

No 2004.5, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper presents a general equilibrium endogenous growth model in which public spending is divided between public productive services and public consumption. A distinguishing feature of the model is the assumption that both components of public spending can be over used and, thus, congested by the private agents. We study the second-best dynamics of the model and prove that it is determinate. Moreover, we show that the optimal second-best policy could be not unique. Finally, the relationship between congestion and the optimal second-best policy, on the one hand, and congestion and the long run growth rate, on the other, is established.

Keywords: Endogenous growth; Congestion; Public spending; Second-Best (search for similar items in EconPapers)
JEL-codes: H3 H5 O4 (search for similar items in EconPapers)
Date: 2004-01
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2004.5

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