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Titel
Public debt and aggregate stability with endogenous growth and a state-dependent consumption tax / Alfred Greiner, Anton Bondarev
VerfasserGreiner, Alfred ; Bondarev, Anton
ErschienenBielefeld, Germany : Universität Bielefeld, Faculty of Business Administration and Economics, February 2014
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Elektronische Ressource
Umfang1 Online-Ressource (21 Seiten)
SerieWorking papers in economics and management ; No. 02-2014
URNurn:nbn:de:hbz:6:2-127488 
DOI10.4119/unibi/2915478 
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Public debt and aggregate stability with endogenous growth and a state-dependent consumption tax [0.2 mb]
Zusammenfassung

We analyze how different budgetary rules affect the stability of an economy in a basic endogenous growth model with public debt and a state-dependent consumption tax rate. We show that a discretionary policy implies that the government violates its inter-temporal budget constraint along a balanced growth path, whereas a balanced budget rule guarantees that the economy is stable. A rule based debt policy gives rise to stability if the reaction of the primary surplus to higher public debt is sufficiently large. Further, in case of a strongly regressive consumption tax rate over a certain range, multiple balanced growth paths may emerge. The main results can be generalized to hold for any endogenous growth model with infinitely lived households.

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