Wealth Effects and Public Debt in an Endogenous Growth Model. Banca d'Italia Public Finance Workshop 'Fiscal Sustainability : Analytical Developments and Emerging Policy Issues', Perugia, 3-5 April 2008

Abstract : The debate on public finances' sustainability has long focused on the conditions for the accumulation of debt. This implied that, empirically, the analyses revolved around estimations of dynamic versions of the debt accumulation equation, through unit root tests and cointegration tests between e.g. revenues and primary expenditures, or debt and deficit. Bohn (2007, Journal of Monetary Economics), has forcefully argued in favour of a stronger focus on theory. The model of this paper shows to which extent and under which conditions earlier results considering fiscal policy in an endogenous growth setting are modified if government spending is not entirely tax-financed. Therefore the model uses Barro's (1990, Journal of Political Economy) production function and Blanchard (1985, Journal of Political Economy)-type consumers to assess fiscal sustainability and the determinants of long-run (or potential) growth, in presence of productive capital services. The main conclusion is that, provided public spending is not too high, it will be growth-enhancing. This feature does not hurt fiscal sustainability if taxes are adjusted appropriately. We also calibrate the model to show that the current level of public capital is low in France, the UK and the USA.
Type de document :
Communication dans un congrès
Liste complète des métadonnées

Littérature citée [21 références]  Voir  Masquer  Télécharger

https://hal-sciencespo.archives-ouvertes.fr/hal-01053226
Contributeur : Spire Sciences Po Institutional Repository <>
Soumis le : mercredi 30 juillet 2014 - 09:38:10
Dernière modification le : lundi 17 juin 2019 - 18:26:09
Document(s) archivé(s) le : mardi 25 novembre 2014 - 20:40:43

Fichier

creel-saraceno.pdf
Fichiers produits par l'(les) auteur(s)

Identifiants

  • HAL Id : hal-01053226, version 1
  • SCIENCESPO : 2441/9644

Collections

Citation

Jérôme Creel, Francesco Saraceno. Wealth Effects and Public Debt in an Endogenous Growth Model. Banca d'Italia Public Finance Workshop 'Fiscal Sustainability : Analytical Developments and Emerging Policy Issues', Perugia, 3-5 April 2008. Banca d'Italia Public Finance Workshop 'Fiscal Sustainability : Analytical Developments and Emerging Policy Issues, Apr 2008, Perugia, Italy. ⟨hal-01053226⟩

Partager

Métriques

Consultations de la notice

136

Téléchargements de fichiers

244