The Macroeconomic Effects of Government Budget Rules and Tax Policy

• Main Authors: LIU, KUAN-TING, 劉冠廷
• Other Authors: HSU, YU-SHAN
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/vamqnf

碩士 === 國立中正大學 === 經濟系國際經濟學研究所 === 105 === This paper establishes an endogenous growth model, and considers the tax rate model to explore the impact of government tax policies on the stability of the economy and economic growth under different budget rules. The paper finds that under the balance budget rule and the temporary deficit budget rule,regardless of government tax policies, the economy has a saddle-path equilibrium.Under the permanent deficit budget rule, if the reaction of the government to change in public debt is not strong enough, in the long-run the economy will go bankrupt when flat tax or progressive tax are applied. When the government imposes a regressive tax, the economy may display indeterminacy. If the reaction of the government to change in public debt is sufficiently large, under flat tax, the economy has a saddle-path equilibrium. By imposing a progressive tax, in the long-run the economy will go bankrupt. Under regressive tax, when the degree of regressivity is not large, the economy has a saddle-path equilibrium. When the degree of regressivity is strong enough, the economy displays indeterminacy. Adopting the balanced budget rule or the temporary deficit budget rule results in the same economic growth rate in the long-run. However, when the government adopts the permanent deficit budget rule, in the long-run economic growth rate is lower than that under the balanced budget and the temporary deficit budget rule.