TY  - GEN
AB  - 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.
DA  - 2014
DO  - 10.4119/unibi/2915478
KW  - Budget rules
KW  - public debt
KW  - inter-temporal budget constraint
KW  - stability
KW  - endogenous growth
LA  - eng
PY  - 2014
SN  - 2196-2723
SP  - 23-
TI  - Public debt and aggregate stability with endogenous growth and a state-dependent consumption tax
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29154781
Y2  - 2024-11-22T10:32:18
ER  -