The Impact of Fiscal Policy on Economic Growth and Social Welfare in an OLG Model with Fully Funded System

• Main Authors: Li-Xuan Liao, 廖秝萱
• Other Authors: Shu-Hua Chang
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/eq4vq4

碩士 === 國立臺中科技大學 === 財政稅務系租稅管理與理財規劃碩士班 === 106 === This study constructs an Overlapping Generations Model of Samuelson (1958) and Diamond (1965), which incorporates Fully Funded System and endogenous growth, productive public expenditure. We compare the impact of fiscal policies of public expenditure and income tax rate on economic growth and social welfare, and discusses whether the proposition of Barro (1990) is still valid. The main findings are as follows. First, when the fiscal policy is to maintain a constant ratio public expenditure, economic growth can reach maximization if public expenditure is equal to the external effect of productive government expenditure. Second, when the fiscal policy is to maintain a constant income tax rate, economic growth can reach maximization if income tax rate is equal to the external effect of productive government expenditure. Third, when the fiscal policy is to maintain a constant public expenditure, raising the proportion of productive public expenditure has a positive social welfare effect, but economic growth and social welfare are not reaching maximization at the same time. This result is different from the proposition of Barro (1990). Fourth, when the fiscal policy is to maintain a constant income tax rate, increasing income tax rate has a positive social welfare effect, but economic growth and social welfare are also not reaching maximization at the same time. This result is different from the proposition of Barro (1990).