Vol. 9 No. 18 (2014)

Artículos

Fiscal Policy, Expectations, and Dynamic Transition in the Simple Endogenous Growth Model

Published 2014-01-01

  • Alejandro Rodríguez Arana

Alejandro Rodríguez Arana
Universidad Iberoamericana image/svg+xml , Ibero American University image/svg+xml , Universidad Iberoamericana image/svg+xml

Abstract

In the simplest neoclassical endogenous growth model, this paper shows that fiscal policies that could be considered as expansive produce a higher level of the capital stock when they are announced. The effects of these policies on the long rate of growth are the same whether or not the policies are announced, nonetheless. In particular, changes in the consumption's tax rates are neutral when they are not announced, but they have short run effects on the rate of growth, and a permanent effect on the capital stock, when they are announced.

Keywords

Endogenous growth, fiscal policy, rational expectations, Euler equation

PDF (Spanish)

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