resource windfall commands a lower level of public capital but a higher level of redistribution through transfers. Second … total factor productivity in the non-resource sector reduces the degree of des-investment in public capital commanded by …

with productivity and output, while output, labor, consumption and the tax rate are uncorrelated with government spending … process of the productivity shock. Second, I show that if agents can only buy and sell one-period risk-free bonds, public debt … shows more persistence than other variables, and it is negatively correlated with productivity and output, and positively …

interest rates, government spending and productivity are stochastic and taxes are distortionary. The contributions of the paper …