The golden rule of public finance and the composition of government expenditures: a growth and welfare analysis

Max Groneck*

*Bijbehorende auteur voor dit werk

OnderzoeksoutputAcademicpeer review

8 Citaten (Scopus)


This paper employs an endogenous growth model to study the growth and welfare effects of the golden rule of public finance. Two versions are compared, whereby government deficits are restricted for the use of public investments. It is shown that the growth effect of the golden rule depends on what kind of expenditure is adjusted to meet debt obligations. A transition from a balanced budget to a golden rule is performed to study welfare. The results indicate that a budget rule with detrimental growth effects can still have positive welfare implications, and vice versa, if the composition of government expenditures and transitional dynamics are taken into account.

Originele taal-2English
Pagina's (van-tot)273-294
Aantal pagina's22
TijdschriftJournal of Economic Policy Reform
Nummer van het tijdschrift4
StatusPublished - 2011
Extern gepubliceerdJa

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