Fiscal Policy and Economic Growth / Eric M. Engen, Jonathan Skinner.

Format:

Book

Author/Creator:

Engen, Eric M.

Contributor:

National Bureau of Economic Research.

Skinner, Jonathan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4223.

NBER working paper series no. w4223

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1992.

Summary:

One view of government fiscal policy is that it stifles dynamic economic growth through the distortionary effects of taxation and inefficient government spending. Another view is that government plays a central role in economic development by providing public goods and infrastructure. This paper develops a generalized model of fiscal policy and output growth that allows for (i) a positive or negative effect of government spending on private productivity, (ii) increasing or decreasing returns to scale, (iii) a transition path away from the equilibrium growth path, and (iv) intratemporal tax distortions. Using data from 107countries during the period 1970-85,and correcting for the potentially serious problem of endogeneity in government policy, we find that a balanced-budget increase in government spending and taxation is predicted to reduce output growth rates.

Notes:

Print version record

December 1992.