The commonly held opinion is that credits taken by the government should rather be used for investive purposes than for consumption. However, from this it should not be concluded that public debt is an adequate instrument to finance public investment. Within a microeconomic based growth model it...

This paper compares and extends the tax competition analysis of ZODROW and MIESZKOWSKI (1986) and OATES and SCHWAB (1991, 1988). In a dynamic model of a small open economy we show that the efficiency of the tax instruments used to finance productive infrastructure depends on technical properties...