Fiscal Policy Composition, Public Debt, and Economic Activity

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Fiscal Policy Composition, Public Debt, and Economic Activity

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Title: Fiscal Policy Composition, Public Debt, and Economic Activity
Author: Ardagna, Silvia
Citation: Ardagna, Silvia. 2001. Fiscal Policy Composition, Public Debt, and Economic Activity. Public Choice 109(3-4): 301-325.
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Abstract: This paper uses a dynamic general equilibrium model i) to investigate how changes to different spending and revenue items of the budget affect economic activity and public finance; and ii) to evaluate the welfare costs of alternative fiscal policy maneuvers. The paper shows that,unlike an increase in government purchases of final goods, an increase in public employment and transfers can have a contractionary effect on the economy in the same way as a rise in tax rates. It also suggests that fiscal adjustments implemented by cutting spending items increase households' welfare and are more effective in reducing the primary deficit and public debt than are increases in tax rates.
Published Version: http://dx.doi.org/10.1023/A:1013021004195
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:2579823
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