Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case

Autores
Rezk, Ernesto
Año de publicación
2005
Idioma
inglés
Tipo de recurso
documento de conferencia
Estado
versión publicada
Descripción
In spite of the valuable contributions the Solow Swan Model rendered to the modern theory of Economic Growth the approach, based on a neoclassical production function with diminishing returns to labour and capital and combined with the assumption of a constant saving rate, yielded the uncomfortable prediction that per capita growth would eventually cease unless exogenous technological progress took place. By acknowledging this deficiency in the model, many theorists enriched the theory of Economic Growth in diverse ways; Cass (1965) and Koopmans (1965), for instance, resorted to Ramsey’s contribution to the analysis of consumer optimization in order to provide an endogenous determination of the saving rate. Let it however be said that this improvement of the neoclassical growth model did not solve the problem of dependence of the long run growth rate on exogenous technical advances. In aiming at sorting out the shortcomings of exogenous growth models, new lines of research, represented by the works of Romer (1986) and Lucas (1988), developed into what is known as endogenous growth models, allowing for a broader capital definition also including human capital and whose main feature was that the long run growth rate could be constant and possitive as diminishing capital marginal product did not take place . In following the latter line of analysis, it results interesting to consider the inclusion of government in endogenous growth models in order that questions of what the optimal government size and the tax rate maximizing per capita consumption, capital and income growth rates should be and what implications they will bear upon the analysis should one allow for distorting taxes to be used. In this connection the paper aims at identifying for Argentina, by using an AK endogenous growth model and resorting to taxes likely to alter incentives upon savings and investment, the government size that makes maximum the per capita growth rate. Furthermore, and whatever magnitude the estimation of government size may render, the empirical exercise carried out seeks to demonstrate that an inter temporal fiscal balance is possible if a more efficiency-oriented and better administered tax system is aimed at, free from distorting taxes and with respect to which existing evasion levels are curtailed.
Facultad de Ciencias Económicas
Materia
Ciencias Económicas
economic growth
endogenous growth
Argentina
Nivel de accesibilidad
acceso abierto
Condiciones de uso
http://creativecommons.org/licenses/by-nc-sa/4.0/
Repositorio
SEDICI (UNLP)
Institución
Universidad Nacional de La Plata
OAI Identificador
oai:sedici.unlp.edu.ar:10915/164337

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spelling Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine caseRezk, ErnestoCiencias Económicaseconomic growthendogenous growthArgentinaIn spite of the valuable contributions the Solow Swan Model rendered to the modern theory of Economic Growth the approach, based on a neoclassical production function with diminishing returns to labour and capital and combined with the assumption of a constant saving rate, yielded the uncomfortable prediction that per capita growth would eventually cease unless exogenous technological progress took place. By acknowledging this deficiency in the model, many theorists enriched the theory of Economic Growth in diverse ways; Cass (1965) and Koopmans (1965), for instance, resorted to Ramsey’s contribution to the analysis of consumer optimization in order to provide an endogenous determination of the saving rate. Let it however be said that this improvement of the neoclassical growth model did not solve the problem of dependence of the long run growth rate on exogenous technical advances. In aiming at sorting out the shortcomings of exogenous growth models, new lines of research, represented by the works of Romer (1986) and Lucas (1988), developed into what is known as endogenous growth models, allowing for a broader capital definition also including human capital and whose main feature was that the long run growth rate could be constant and possitive as diminishing capital marginal product did not take place . In following the latter line of analysis, it results interesting to consider the inclusion of government in endogenous growth models in order that questions of what the optimal government size and the tax rate maximizing per capita consumption, capital and income growth rates should be and what implications they will bear upon the analysis should one allow for distorting taxes to be used. In this connection the paper aims at identifying for Argentina, by using an AK endogenous growth model and resorting to taxes likely to alter incentives upon savings and investment, the government size that makes maximum the per capita growth rate. Furthermore, and whatever magnitude the estimation of government size may render, the empirical exercise carried out seeks to demonstrate that an inter temporal fiscal balance is possible if a more efficiency-oriented and better administered tax system is aimed at, free from distorting taxes and with respect to which existing evasion levels are curtailed.Facultad de Ciencias Económicas2005-11info:eu-repo/semantics/conferenceObjectinfo:eu-repo/semantics/publishedVersionObjeto de conferenciahttp://purl.org/coar/resource_type/c_5794info:ar-repo/semantics/documentoDeConferenciaapplication/pdfhttp://sedici.unlp.edu.ar/handle/10915/164337enginfo:eu-repo/semantics/altIdentifier/url/https://bd.aaep.org.ar/anales/works/works2005/rezk.pdfinfo:eu-repo/semantics/openAccesshttp://creativecommons.org/licenses/by-nc-sa/4.0/Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0)reponame:SEDICI (UNLP)instname:Universidad Nacional de La Platainstacron:UNLP2025-09-29T11:43:21Zoai:sedici.unlp.edu.ar:10915/164337Institucionalhttp://sedici.unlp.edu.ar/Universidad públicaNo correspondehttp://sedici.unlp.edu.ar/oai/snrdalira@sedici.unlp.edu.arArgentinaNo correspondeNo correspondeNo correspondeopendoar:13292025-09-29 11:43:22.227SEDICI (UNLP) - Universidad Nacional de La Platafalse
dc.title.none.fl_str_mv Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case
title Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case
spellingShingle Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case
Rezk, Ernesto
Ciencias Económicas
economic growth
endogenous growth
Argentina
title_short Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case
title_full Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case
title_fullStr Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case
title_full_unstemmed Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case
title_sort Public expenditure and optimal government size in an endogenous growth model: an analysis of the Argentine case
dc.creator.none.fl_str_mv Rezk, Ernesto
author Rezk, Ernesto
author_facet Rezk, Ernesto
author_role author
dc.subject.none.fl_str_mv Ciencias Económicas
economic growth
endogenous growth
Argentina
topic Ciencias Económicas
economic growth
endogenous growth
Argentina
dc.description.none.fl_txt_mv In spite of the valuable contributions the Solow Swan Model rendered to the modern theory of Economic Growth the approach, based on a neoclassical production function with diminishing returns to labour and capital and combined with the assumption of a constant saving rate, yielded the uncomfortable prediction that per capita growth would eventually cease unless exogenous technological progress took place. By acknowledging this deficiency in the model, many theorists enriched the theory of Economic Growth in diverse ways; Cass (1965) and Koopmans (1965), for instance, resorted to Ramsey’s contribution to the analysis of consumer optimization in order to provide an endogenous determination of the saving rate. Let it however be said that this improvement of the neoclassical growth model did not solve the problem of dependence of the long run growth rate on exogenous technical advances. In aiming at sorting out the shortcomings of exogenous growth models, new lines of research, represented by the works of Romer (1986) and Lucas (1988), developed into what is known as endogenous growth models, allowing for a broader capital definition also including human capital and whose main feature was that the long run growth rate could be constant and possitive as diminishing capital marginal product did not take place . In following the latter line of analysis, it results interesting to consider the inclusion of government in endogenous growth models in order that questions of what the optimal government size and the tax rate maximizing per capita consumption, capital and income growth rates should be and what implications they will bear upon the analysis should one allow for distorting taxes to be used. In this connection the paper aims at identifying for Argentina, by using an AK endogenous growth model and resorting to taxes likely to alter incentives upon savings and investment, the government size that makes maximum the per capita growth rate. Furthermore, and whatever magnitude the estimation of government size may render, the empirical exercise carried out seeks to demonstrate that an inter temporal fiscal balance is possible if a more efficiency-oriented and better administered tax system is aimed at, free from distorting taxes and with respect to which existing evasion levels are curtailed.
Facultad de Ciencias Económicas
description In spite of the valuable contributions the Solow Swan Model rendered to the modern theory of Economic Growth the approach, based on a neoclassical production function with diminishing returns to labour and capital and combined with the assumption of a constant saving rate, yielded the uncomfortable prediction that per capita growth would eventually cease unless exogenous technological progress took place. By acknowledging this deficiency in the model, many theorists enriched the theory of Economic Growth in diverse ways; Cass (1965) and Koopmans (1965), for instance, resorted to Ramsey’s contribution to the analysis of consumer optimization in order to provide an endogenous determination of the saving rate. Let it however be said that this improvement of the neoclassical growth model did not solve the problem of dependence of the long run growth rate on exogenous technical advances. In aiming at sorting out the shortcomings of exogenous growth models, new lines of research, represented by the works of Romer (1986) and Lucas (1988), developed into what is known as endogenous growth models, allowing for a broader capital definition also including human capital and whose main feature was that the long run growth rate could be constant and possitive as diminishing capital marginal product did not take place . In following the latter line of analysis, it results interesting to consider the inclusion of government in endogenous growth models in order that questions of what the optimal government size and the tax rate maximizing per capita consumption, capital and income growth rates should be and what implications they will bear upon the analysis should one allow for distorting taxes to be used. In this connection the paper aims at identifying for Argentina, by using an AK endogenous growth model and resorting to taxes likely to alter incentives upon savings and investment, the government size that makes maximum the per capita growth rate. Furthermore, and whatever magnitude the estimation of government size may render, the empirical exercise carried out seeks to demonstrate that an inter temporal fiscal balance is possible if a more efficiency-oriented and better administered tax system is aimed at, free from distorting taxes and with respect to which existing evasion levels are curtailed.
publishDate 2005
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