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...

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...