Macroeconomics - ECON 510 a , Fall 2010 , Yale University Fiscal Policy
نویسنده
چکیده
To study questions of taxation in the neo-classical growth model, we need to extend it to allow for government spending and taxation. Here we study the simplest possible model, where government spending is an exogenous stochastic process G(s). We assume that this spending is wasted (thrown into the ocean). It would be possible to amend the model to allow for example for the financing of public goods that benefit all households, but those extensions are not key to make our main points. The aggregate resource constraint then incorporates government spending so that
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