Growth and welfare maximization in models of public finance and endogenous growth
Norman Gemmell () and
Richard Kneller ()
No 11-041, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research
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 growth and welfare maximizing tax rates. Secondly, it examines the distinct model outcomes in terms of their growth rates and welfare levels. This comparison highlights the range of trade-offs: the growth maximizing tax rate can be above, below, or equal to 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)
JEL-codes: E62 H21 H50 O40 (search for similar items in EconPapers)
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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 (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:11041
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