Growth and Welfare Maximization in Models of Public Finance and Endogenous Growth

Florian Misch, Norman Gemmell and Richard Kneller

Discussion Papers from University of Nottingham, CREDIT

Abstract: This paper evaluates the trade-off between growth and welfare maximization from two perspectives. Firstly, it synthesizes and extends endogenous growth models with public finance to compare the growth and welfare maximizing tax rates. Secondly, it examines the distinct model outcomes in terms of the growth rates and welfare levels. This comparison highlights the range of trade-offs: the growth maximizing tax rate can lie above, below, or on the welfare maximizing equivalent. We find however that even relatively large differences in growth and welfare maximizing tax rates translate into relatively small differences in growth rates, and, in some cases, welfare levels.

Keywords: Economic Growth; Productive Public Spending; Optimal Fiscal Policy (search for similar items in EconPapers)
Date: 2008-09
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Growth and Welfare Maximization in Models of Public Finance and Endogenous Growth (2013)
Working Paper: Growth and welfare maximization in models of public finance and endogenous growth (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcre:08/09

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