Abstract
This paper examines the effect of fiscal policy and provision of productive public goods on the dynamics of growth and inequality. A model is developed in which public infrastructure is both an engine of growth and a determinant of the distributions of wealth, income, and welfare. The design of government spending and taxation policies is a critical source of (i) the growth-inequality relationship, and (ii) the efficiency-equity trade-off, both in transition as well as the steady-state. For example, growth-enhancing government spending policies can generate sharp intertemporal trade-offs in the evolution of income inequality: inequality falls in the short run, but gradually increases over time to worsen in the long-run. The existence of an efficiency-equity trade-off depends on the taxation policy used to finance government spending. In this respect, the capital income tax serves as an effective tool of egalitarian redistribution. The redistributive effects of the consumption tax as an alternative to the more conventional labor income tax are also highlighted.
Keywords No keywords specified (fix it)
Categories (categorize this paper)
Options
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

PhilArchive copy


Upload a copy of this paper     Check publisher's policy     Papers currently archived: 57,138
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

No references found.

Add more references

Citations of this work BETA

No citations found.

Add more citations

Similar books and articles

Analytics

Added to PP index
2009-01-28

Total views
21 ( #492,270 of 2,411,685 )

Recent downloads (6 months)
1 ( #539,172 of 2,411,685 )

How can I increase my downloads?

Downloads

My notes