Growth strategies: Fiscal versus institutional policies

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

Authors

This paper analyzes the growth impact of fiscal and institutional policies for alternative sizes of regions. The local government provides a public input that may be subject to relative congestion thus reducing its individual availability. Then private capital productivity is affected by the number of firms utilizing the governmental input. Institutional policies include the decision about the type of public input while fiscal policies decide on its extent. Private capital accumulation incurs adjustment costs that depend upon the ratio between private and public investment. After deriving the decentralized equilibrium, fiscal and institutional policies as well as their interdependencies and welfare implications are discussed. Due to the feedback effects both policies may not be determined independently. It is shown that depending on the region's size a certain type of the public input maximizes growth.

OriginalspracheEnglisch
ZeitschriftEconomic Modelling
Jahrgang25
Ausgabenummer4
Seiten (von - bis)605-622
Anzahl der Seiten18
ISSN0264-9993
DOIs
PublikationsstatusErschienen - 01.07.2008

DOI