Time-varying Consumption Tax, Productive Government Spending, and Aggregate Instability

Mauro Bambi () and Alain Venditti

Discussion Papers from Department of Economics, University of York

Abstract: In this paper we study the dynamics of an economy with productive government spending under the assumption that the government balances its budget by levying endogenous non-linear consumption taxes. For standard specifcation of the utility function and production function, we prove that under counter-cyclical consumption taxes, while there exists a unique balanced growth path, sunspot equilibria based on self-fulfilling expectations occur through a form of global indeterminacy.

Keywords: Endogenous growth; time-varying consumption tax; global indeterminacy; self-fulfilling expectations; sunspot equilibria. (search for similar items in EconPapers)
JEL-codes: C62 E32 H20 O41 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-dge, nep-mac, nep-pbe and nep-upt
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Time‐varying consumption tax, productive government spending, and aggregate instability (2021)
Working Paper: Time‐varying consumption tax, productive government spending, and aggregate instability (2019)
Working Paper: Time-varying Consumption Tax, Productive Government Spending, and Aggregate Instability (2018)
Working Paper: Time-varying Consumption Tax, Productive Government Spending, and Aggregate Instability (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:16/01

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