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• W1787993891 abstract "Abstract We examine the theoretical interrelations between equilibrium (in)determinacy and economic growth in a one‐sector representative‐agent model of endogenous growth with progressive taxation of income and productive flow of public spending. We analytically show that, if the demand‐side effect of government purchases is weaker, the economy exhibits an indeterminate balanced‐growth equilibrium and belief‐driven growth fluctuations when the tax schedule is sufficiently progressive or regressive. If the supply‐side effect of public expenditures is weaker, indeterminacy and sunspots arise under progressive income taxation. In sharp contrast to traditional Keynesian‐type stabilization policies, our analysis finds that raising the tax progressivity may destabilize an endogenously growing economy with fluctuations driven by agents’ self‐fulfilling expectations." @default.
• W1787993891 created "2016-06-24" @default.
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• W1787993891 date "2013-08-01" @default.
• W1787993891 modified "2023-10-18" @default.
• W1787993891 title "On indeterminacy and growth under progressive taxation and productive government spending" @default.
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• W1787993891 doi "https://doi.org/10.1111/caje.12042" @default.
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