The Economic Effects of Government Expenditures

Laurence J. Kotlikoff

NBER Working Paper No. 964
Issued in August 1982
NBER Program(s):   PE

This paper discusses conceptual problems of distinguishing "expenditure" policy from "tax" policy and "deficit" policy. The paper argues that each of these concepts is ill-defined and does not provide a useful basis for examining the government" underlying fiscal policies. The fundamentals of fiscal policy involve changes in marginal incentives, inframarginal intra- and intergenerational redistribution, and direct government consumption. The paper reviews some of the effects of these fundamental policy choices on economic growth.

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