Title: Optimal size and composition of government spending
Abstract: Building on the Barro model of government spending and economic growth, this paper investigates the optimal size and composition of government spending. It shows that under general parameter restrictions, the optimal fiscal spending rules may be characterized as being of two distinct types. One is characterized by a high income tax rate, and revenues are used mainly for income transfers. The other is characterized by a relatively low income tax rate, and government spending is largely devoted to public investments. The former is associated with low economic growth rates, while the latter is associated with high growth rates.
Publication Year: 1992
Publication Date: 1992-12-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 37
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