Productive government expenditure and fiscal sustainability

Real Arai

MPRA Paper from University Library of Munich, Germany

Abstract: We consider an overlapping generations model in which public spending directly contributes to grow up productivity as Barro (1990) and a government comforts the constant spending-GDP and debtspending ratio rules. We analyse policy effects on fiscal sustainability, growth rate and welfare. This paper gives some remarks as follows: First, we demonstrate that when spending-GDP ratio rises it may be more sustainable fiscal policy. Second, we show analytically that if higher spending-GDP ratio is more sustainable fiscal policy, it brings higher growth rate in both short-term and long-term. Third, such policy change is Pareto improving. These remarks are not obtained in previous researches on fiscal sustainability.

JEL-codes: E62 H54 H63 (search for similar items in EconPapers)
Date: 2008-05-02
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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https://mpra.ub.uni-muenchen.de/8553/2/MPRA_paper_8553.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/8560/1/MPRA_paper_8560.pdf revised version (application/pdf)

Related works:
Journal Article: Productive Government Expenditure and Fiscal Sustainability (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:8553

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