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Endogenous growth in a model with heterogeneous agents and voting on public goods

Kirill Borissov () and Alexander Surkov ()

MPRA Paper from University Library of Munich, Germany

Abstract: We consider a Barro-type endogenous growth model in which the government’s purchases of goods and services enter into the production function. The provision of government services is financed by flat-rate (linear) income or lump-sum taxes. It is assumed that individuals differing in their discount factors vote on the tax rates. We propose a concept of voting equilibrium leading to some versions of the median voter theorem for steady-state equilibria, fully characterize steady-state equilibria and show that if the median voter discount factor is sufficiently low, the long-run rate of growth in the case of flat-rate income taxation is higher than that in the case of lump-sum taxation.

Keywords: economic growth; voting; proportional; flat-rate; linear tax; lump-sum tax; heterogeneous agents; endogenous growth (search for similar items in EconPapers)
JEL-codes: D72 D91 E62 H21 H31 H41 O4 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-cdm, nep-dge, nep-fdg, nep-mac, nep-pbe and nep-pol
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Working Paper: Endogenous Growth in a Model with Heterogeneous Agents and Voting on Public Goods (2010) Downloads
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