Within the Barro (1990) model of productive public services, but with the inclusion of public debt, we derive and characterize on the balanced growth path, a set of welfare-maximizing fiscal rules under two budgetary regimes - one with only the standard dynamic government budget constraint, and...

In this paper, we study the effects of bureaucratic corruption on fiscal policy and the subsequent impact on economic growth. Here corruption takes three forms: (i) it reduces the tax revenue raised from households, (ii) it inflates the volume of government spending, and (iii) it reduces the...

The paper introduces decentralized policymaking into a game-theoretic model with output growth through capital accumulation, and in which the determination of taxes, seigniorage and the long-run growth rate of the economy reflects the strategic interactions between the government, the central...