Growth strategies: Fiscal versus institutional policies
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In: Economic Modelling, Vol. 25, No. 4, 01.07.2008, p. 605-622.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - Growth strategies
T2 - Fiscal versus institutional policies
AU - Ott, Ingrid
AU - Soretz, Susanne
PY - 2008/7/1
Y1 - 2008/7/1
N2 - 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.
AB - 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.
KW - Economics
KW - Adjustment costs
KW - Congested public inputs
KW - Fiscal and institutional policies
KW - Regional growth
UR - http://www.scopus.com/inward/record.url?scp=43849092484&partnerID=8YFLogxK
U2 - 10.1016/j.econmod.2007.10.008
DO - 10.1016/j.econmod.2007.10.008
M3 - Journal articles
VL - 25
SP - 605
EP - 622
JO - Economic Modelling
JF - Economic Modelling
SN - 0264-9993
IS - 4
ER -