Hostname: page-component-7c8c6479df-p566r Total loading time: 0 Render date: 2024-03-29T02:04:25.360Z Has data issue: false hasContentIssue false

GROWTH AND PUBLIC INFRASTRUCTURE

Published online by Cambridge University Press:  16 November 2010

Nigar Hashimzade
Affiliation:
University of Reading
Gareth D. Myles*
Affiliation:
University of Exeter and Institute for Fiscal Studies
*
Address correspondence to: Gareth D. Myles, Department of Economics, University of Exeter, Exeter EX6 8HT, UK; e-mail: gdmyles@ex.ac.uk.

Abstract

The paper analyzes a multicountry extension of the Barro model of productive public expenditure. In the presence of positive infrastructural externalities between countries, the provision of infrastructure will be inefficiently low if countries do not coordinate. This provides a role for a supranational body, such as the European Union, to coordinate the policies of the individual governments. It is shown how intervention by a supranational body can raise welfare by internalizing the infrastructural externality. Infrastructural externalities increase the importance of tax policy in the growth process and distribute the benefits of taxation across countries.

Type
Articles
Copyright
Copyright © Cambridge University Press 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Barro, Robert J. (1990) Government spending in a simple model of endogenous growth. Journal of Political Economy 98, S103S125.CrossRefGoogle Scholar
Becker, Daniel and Rauscher, Michael (2007) Fiscal Competition in Space and Time: An Endogenous-Growth Approach. CESifo Working Paper 2048.CrossRefGoogle Scholar
Bianconi, Marcelo and Turnovsky, Stephen J. (1997) International effects of government expenditure in interdependent economies. Canadian Journal of Economics 30, 5784.CrossRefGoogle Scholar
Boadway, Robin and Shah, Anwar (2009) Fiscal Federalism: Principles and Practice of Multi-Order Governance. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Brueckner, Jan K. (2006) Fiscal federalism and economic growth. Journal of Public Economics 90, 21072120.CrossRefGoogle Scholar
Chen, Jhy-hwa, Shieh, Jhy-yuan, Lai, Ching-chong, and Chang, Juin-jen (2005) Productive public expenditure and imperfect competition with endogenous price markup. Oxford Economic Papers 47, 522544.CrossRefGoogle Scholar
Cooley, Thomas F. and Prescott, Edward C. (1995) Economic growth and business cycles. In Cooley, Thomas F. (ed.), Frontiers of Business Cycle Research, pp. 138. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Futagami, Koichi, Morita, Yuichi, and Shibata, Akihisa (1993) Dynamic analysis of an endogenous growth model with public capital. Scandinavian Journal of Economics 95, 607625.CrossRefGoogle Scholar
Gomez, Manuel A. (2004) Optimal fiscal policy in a growing economy with public capital. Macroeconomic Dynamics 8, 419435.CrossRefGoogle Scholar
Hashimzade, Nigar and Myles, Gareth D. (2009) Growth and Public Infrastructure. Economics and Management Discussion Papers 2009-03, Henley Business School, University of Reading.Google Scholar
Hatfield, John W. (2006) Federalism, Taxation, and Economic Growth. Research Papers 1929, Graduate School of Business, Stanford University.CrossRefGoogle Scholar
Irmen, Andreas and Kuehnel, Johanna (2009) Productive government expenditure and economic growth. Journal of Economic Surveys 23, 692733.CrossRefGoogle Scholar
Iwamoto, Yasushi and Shibata, Akihisa (2008) International and intergenerational aspects of capital income taxation in an endogenously growing world economy. Review of International Economics 16, 383399.CrossRefGoogle Scholar
Marrero, Gustavo A. (2008) Revisiting the optimal stationary public investment policy in endogenous growth economies. Macroeconomic Dynamics 12, 172194.CrossRefGoogle Scholar
Myles, Gareth D. (2007) Economic Growth and the Role of Taxation. OECD.Google Scholar
Rauscher, Michael (2005) Economic growth and tax-competing leviathans. International Tax and Public Finance 12, 457474.CrossRefGoogle Scholar
Razin, Assaf and Yuen, Chi-Wa (1997) Factor mobility and income growth: two convergence hypotheses. Review of Development Economics 1, 171190.CrossRefGoogle Scholar
Tsoukis, Chris and Miller, Nigel J. (2003) Public services and endogenous growth. Journal of Policy Modeling 25, 297307.CrossRefGoogle Scholar
Turnovsky, Stephen J. (1999) Productive government expenditure in a stochastically growing economy. Macroeconomic Dynamics 3, 544570.CrossRefGoogle Scholar
Turnovsky, Stephen J. (2004) The transitional dynamics of fiscal policy: Long-run capital accumulation and growth. Journal of Money, Credit and Banking 36, 883910.CrossRefGoogle Scholar