The impact of simple fiscal rules in growth models with public goods and congestion

Ghosh, S. and Nolan, C. (2007) The impact of simple fiscal rules in growth models with public goods and congestion. Manchester School, 75(5), pp. 634-651. (doi: 10.1111/j.1467-9957.2007.01034.x)

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Publisher's URL: http://dx.doi.org/10.1111/j.1467-9957.2007.01034.x

Abstract

In this paper we examine the implication of a simple class of fiscal rules for long-run economic growth and welfare. The Golden Rule of Public Finance that we examine is motivated by institutional arrangements in countries such as Germany and the UK. We find that rules that seek to limit government borrowing to productive investment spending have a clear justification in terms of growth and welfare when government-provided goods are otherwise excessively provided. Even in the case where it is private consumption that is excessive, the Golden Rule of Public Finance is likely to be good from a growth perspective, but the welfare effects are more ambiguous.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Nolan, Professor Charles
Authors: Ghosh, S., and Nolan, C.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Manchester School
Publisher:Wiley
ISSN:1463-6786
ISSN (Online):1467-9957

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