This paper examines the quantitative implications of government fiscal policy in a discrete-time one-sector growth model with a productive externality that generates social increasing returns to scale. Starting from a laissez-faire economy that exhibits local indeterminacy, we show that the...

This paper examines the quantitative implications of government fiscal policy in a discrete-time one-sector growth model with a productive externality that generates social increasing returns to scale. Starting from a laissez-faire economy that exhibits local indeterminacy, we show that the...

This paper explores the effects of government fiscal policy in an infinite horizon, one-sector growth model with a productive externality and aggregate increasing returns. We show that, depending on the level of a constant tax or subsidy, the model can exhibit various types of endogenous...