TY  - JOUR
AU  - Corsetti,Giancarlo
AU  - Roubini,Nouriel
TI  - Optimal Government Spending and Taxation in Endgenous Growth Models
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5851
PY  - 1996
Y2  - December 1996
UR  - http://www.nber.org/papers/w5851
L1  - http://www.nber.org/papers/w5851.pdf
N1  - Author contact info:
Giancarlo Corsetti
Faculty of Economics
Cambridge University
Sidgwick Avenue
CB3 9DD Cambridge, Cambs
United Kingdom
Tel: +44(0)1223335235
E-Mail: giancarlo.corsetti@gmail.com

Nouriel Roubini
Department of Economics, KMC 7-83
Stern School of Business, New York University
44 West 4th Street
New York, NY  10012
Tel: 212/998-0886
Fax: 212/995-4218
E-Mail: nroubini@stern.nyu.edu
AB  - This paper analyzes optimal spending, tax and financial policies in models of endogenous growth where public spending is productive.  We extend previous work in four directions.  First, we analyze optimal policies when the government is allowed to borrow and lend, rather than being restricted to run a balanced budget in every period.  Second, we develop a model with a separate human capital accumulation sector.  Therefore, the properties of optimal policies depend on whether government spending affects the productivity of the final goods sector or the human capital accumulation sector.  Third, we consider the policy implications of alternative assumptions about which factor of production benefits from the external effects of productive public goods.  Fourth, we study the implications of restrictions on the menu of tax instruments available to the policy maker.  We contrast optimal tax rates on human and physical capital under different assumptions on technology and distribution.  We analyze the welfare properties of public debt and assets.
ER  -