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Author: John Creedy
Publisher:
ISBN: 9780734040091
Category : Expenditures, Public
Languages : en
Pages : 35
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Book Description
This paper examines the choice of government expenditure on public goods and transfer payments (in the form of pension) in an overlapping generations model, in which individuals live for two 'periods' and expenditure is financed on a pay-as-you-go (PAYG) basis. The condition required for majority support of the social contract involved in the PAYG scheme is established and shown to be independent of tax rates and expenditure levels. The choice of expenditure composition can thus be made conditional on acceptance of the social contract. Two decision mechanisms regarding the choice of government expenditure are considered. The first is positive and involves majority voting and the second is normative and involves maximizing a social welfare function. In each case the ratio of the transfer payment to public goods expenditure depends, among other things, on the ratio of median to mean income. A reduction in the skewness of the income distribution is associated with a reduction in this ratio, at a decreasing rate.
Author: John Creedy
Publisher:
ISBN: 9780734040091
Category : Expenditures, Public
Languages : en
Pages : 35
Get Book Here
Book Description
This paper examines the choice of government expenditure on public goods and transfer payments (in the form of pension) in an overlapping generations model, in which individuals live for two 'periods' and expenditure is financed on a pay-as-you-go (PAYG) basis. The condition required for majority support of the social contract involved in the PAYG scheme is established and shown to be independent of tax rates and expenditure levels. The choice of expenditure composition can thus be made conditional on acceptance of the social contract. Two decision mechanisms regarding the choice of government expenditure are considered. The first is positive and involves majority voting and the second is normative and involves maximizing a social welfare function. In each case the ratio of the transfer payment to public goods expenditure depends, among other things, on the ratio of median to mean income. A reduction in the skewness of the income distribution is associated with a reduction in this ratio, at a decreasing rate.
Author: John Creedy
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper examines the question of why the composition of government expenditure differs among democratic countries and to what extent it may be explained by differences in economic conditions or preferences. A simple overlapping generations model, which allows for a range of relevant factors, is constructed to examine the division of expenditure on public goods and a transfer payment under majority voting. The model yields a closed-form solution for the majority choice of the expenditure ratio. An empirical examination suggests that income inequalities play a minor role while different preferences for public goods reflecting cultural differences across countries may play an important role in accounting for the substantial variations in expenditure patterns.
Author: Toshiki Tamai
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper analyzes how population aging affects the government expenditure composition, economic growth, and social welfare under democracy using an overlapping generations model. As public investment and welfare expenditures are financed by income tax, intergenerational conflicts remain in the aged societies. Retired generations, comprising elderly citizens, favor increased income tax rates through increased current welfare expenditures relative to public investment. Working generations, comprising young citizens, favor increased public investment but not increased income tax rate. Population aging strengthens elderly citizens' political power, leading to increased tax and budgets shifting from public investment to current welfare. Hence, population ageing deteriorates economic growth and social welfare through democracies. On the other hand, population aging by an increase in longevity enhances capital accumulation by increasing savings for old-age consumption. Furthermore, an increase in longevity also brings survival benefits for young and old generations, allowing them to enjoy their retired lives and returns on public investment. Population aging brings positive direct effects on growth and welfare. Therefore, an inverted-U shaped relationship might exist between population aging and on both growth and welfare owing to the direct and indirect effects of population aging coexisting.
Author: Ms.Era Dabla-Norris
Publisher: INTERNATIONAL MONETARY FUND
ISBN: 9781451850116
Category : Business & Economics
Languages : en
Pages : 0
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Book Description
This paper addresses the potential effects on human capital accumulation and economic growth of the alternative compositions of public expenditures in the context of a computable dynamic general equilibrium model of overlapping generations and heterogeneous agents in which altruistic parents make schooling decisions for their children. In the presence of fixed and variable costs for different levels of schooling, we show that reducing household costs of primary education has the largest positive impact on growth and poverty reduction in the short run. Moreover, an increase in higher education spending increases long-run growth. These effects can be substantial even when increasing education spending comes at the expense of public infrastructure investment.
Author: John Creedy
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper examines the choice between government expenditure on public goods and transfer payments, in the form of a pension, in an overlapping-generations model. Government expenditure is tax-financed on a pay-as-you-go basis. A utilitarian judge chooses expenditures to maximize a social welfare function. The nonlinear solution is found to involve the ratio of a welfare-weighted average income, which depends on the inequality aversion of the judge, to arithmetic mean income. An approximation for this ratio is found that produces explicit solutions for the optimal composition. The result is used to obtain an indication of “implicit” inequality aversion for a range of countries.
Author: Stefano Paternostro
Publisher: World Bank Publications
ISBN:
Category : Absolute Poverty
Languages : en
Pages : 39
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Book Description
Abstract: Public spending has effects which are complex to trace and difficult to quantify. But the composition of public expenditure has become the key instrument by which development agencies seek to promote economic development. In recent years, the development assistance to heavily indebted poor countries (HIPCs) has been made conditional on increased expenditure on categories that are thought to be "pro-poor". This paper responds to the growing concern being expressed about the conceptual foundations and the empirical basis for the belief that poverty can be reduced through targeted public spending. While it is widely accepted that growth and redistribution are important sources of reduction in absolute poverty, a review of the literature confirms the lack of an appropriate theoretical framework for assessing the impact of public spending on growth as well as poverty. There is a need to combine principles of both public economics and growth theory to develop appropriate theoretical guidance for public expenditure policy. This paper identifies a number of approaches that are beginning to address this gap. Building on these approaches, it proposes a framework that has its foundation in a broadly articulated development strategy and its economic goals such as growth, equity, and poverty reduction. It recommends the use of public economics principles to clarify the roles of the private and public sectors and to recognize the complementarity of spending, taxation, and regulatory instruments available to affect public policy. With regard to the impact of any given type of public spending, policy recommendations must be tailored to countries and be based on empirical analysis that takes account of the lags and leads in their effects on equity and growth and ultimately on poverty. The paper sketches out such a framework as the first step in what will have to be a longer-term research agenda to provide theoretically and empirically robust and verifiable guidance to public spending policy.
Author: Richard Hemming
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 62
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Book Description
This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.
Author: Mitoshi Yamaguchi
Publisher: World Scientific
ISBN: 9814571504
Category : Business & Economics
Languages : en
Pages : 355
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Book Description
This unique book contains novel and in-depth research regarding economic development in Japan. The authors examine economic development in Japan from both theoretical and empirical perspectives. Using general equilibrium growth accounting and the overlapping generations model, they analyze the relationships between population, agriculture and the economy. The research results are unprecedented and show the effects of increased adult longevity on national savings and the effects of demographic change on the industrial structure; the push-pull effects of technical change in agricultural and non-agricultural sectors and the positive effects of population on technical change and economic development.
Author: Stephen E. Spear
Publisher: Emerald Group Publishing
ISBN: 1837530548
Category : Business & Economics
Languages : en
Pages : 200
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Book Description
The 800 pound gorilla in the room of macroeconomics is the question of why the overlapping generations model didn’t become the central workhorse model for macroeconomics, as opposed to the neoclassical growth model. The authors here explore the co-evolution of the two models.
Author: Pierre-Richard Agénor
Publisher: Princeton University Press
ISBN: 0691155801
Category : Business & Economics
Languages : en
Pages : 264
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Book Description
Laying a solid foundation of economic facts and ideas, this book provides a comprehensive look at the critical role of public capital in development.
