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Economics of Planning

, Volume 28, Issue 2–3, pp 119–146 | Cite as

Growth, debt and public infrastructure

  • Thomas Krichel
  • Paul Levine
Article

Abstract

This paper presents a closed economy model of endogenous growth driven by capital externalities arising from both private capital and public infrastructure. The model is calibrated to fit data for India, an approximately closed economy. Simulations suggest that fiscal policy certainly matters and the choice of the income taxation rate, the mix of government spending between infrastructure and public consumption goods, and the long-run government debt/GDP ratio can all significantly affect the long-run growth rate. Intertemporal aspects of fiscal policy are also important and the precommitment (time-inconsistent) and non-precommitment policies differ substantially.

Keywords

Economic Growth Taxation Rate Income Taxation Economic System Economy Model 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Kluwer Academic Publishers 1995

Authors and Affiliations

  • Thomas Krichel
    • 1
  • Paul Levine
    • 2
  1. 1.Department of EconomicsUniversity of SurreyGuildfordU.K.
  2. 2.London Business School and CEPRUniversity of SurreyGuildfordU.K.

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