This paper incorporates the notion of public capital in a Blanchard OLG model to study the effects of debt-financed public investments on growth and welfare in the long-run. The simple analytic result is that public debt can enhance both welfare and private capital in equilibrium, conditional on...

The effect of public investment on economic growth is a crucial public policy issue. Empirical research into this question was stimulated by Aschauer (1989), who suggested that public capital has a powerful impact on the productivity of private capital.Aschauer's results were controversial and...

This paper employs an endogenous growth model to study the growth and welfare effects of the golden rule of public finance. Two versions are compared, whereby government deficits are restricted for the use of public investments. It is shown that the growth effect of the golden rule depends on...

Using a large, representative sample of consumer financial transaction data, this paper studies the consumption and savings response to a permanent increase in income tax. In 2015, Singapore marginally raised the income taxes on high-income taxpayers. Using difference-in-differences regressions,...

We provide a systematic analysis of fiscal consolidation in a medium-scale dynamic general equilibrium model. Our results show that the choice of the consolidation instrument is very important, not only with respect to the short- and long-run output effects of the different consolidation...

In this paper we analyze an endogeneous growth model with human capital that results from public educational spending. We allow for public debt and analyze three different debt policies: a balanced government budget, a slight deficit policy where debt grows but less than GDP, and a strong...

In this paper, we compare growth and welfare effects of various budget rules within an endogenous growth model with productive public capital, utility enhancing public consumption and public debt. We find that a fixed deficit regime does not affect the long run growth rate compared to a balanced...

Our country faces a serious fiscal crisis. According to President Obama's National Commission on Fiscal Responsibility and Reform, the nation is on an unsustainable fiscal path, with spending well above tax revenue. The Congressional Budget Office projects that, under current policies, federal...

Die politische Diskussion um die deutsche Schuldenbremse klingt nicht ab. Nicht zuletzt dürften die Verhandlungen über den Bundeshaushalt des Jahres 2025 ihren Teil dazu beigetragen haben. Im Grunde kritisieren zu einem erheblichen Teil dieselben Personen die Schuldenbremse mit denselben...