RATIONAL EXPECTATIONS AND THE ROLE OF MONETARY POLICY
In: Journal of monetary economics, Heft 1-32 1
ISSN: 0304-3932
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In: Journal of monetary economics, Heft 1-32 1
ISSN: 0304-3932
In: SWISS REVIEW OF WORLD AFFAIRS, Heft 1, S. 20-22
In: Journal of political economy, Band 98, Heft 5(PT.2)
ISSN: 0022-3808
ONE STRAND OF ENDOGENOUS-GROWTH MODELS ASSUMES CONSTANT RETURNS TO A BROAD CONCEPT OF CAPITAL. THE AUTHOR EXTENDS THESE MODELS TO INCLUDE TAX-FINANCED GOVERNMENT SERVICES THAT AFFECT PRODUCTION OR UTILITY. GROWTH AND SAVINGS RATES FALL WITH AN INCREASE IN UTILITY-TYPE EXPENDITURES; THE TWO RATES RISE INITIALLY WITH PRODUCTIVE GOVERNMENT EXPENDITURES BUT SUBSEQUENTLY DECLINE. WITH AN INCOME TAX, THE DECENTRALIZED CHOICES OF GROWTH AND SAVING ARE "TOO LOW," BUT IF THE PRODUCTION FUNCTION IS COBB-DOUGLAS, THE OPTIMIZING GOVERNMENT STILL SATISFIES A NATURAL CONDITION FOR PRODUCTIVE EFFICIENCY. EMPIRICAL EVIDENCE ACROSS COUNTRIES SUPPORTS SOME OF THE HYPOTHESES ABOUT GOVERNMENT AND GROWTH.