European Parliament Library

Public Investment, Public Finance, and Growth :, The Impact of Distortionary Taxation, Recurrent Costs, and Incomplete Appropriability, Christopher Adam, David Bevan

Abstract
Effective public investment requires governments to address the "recurrent cost problem" to ensure operations and maintenance (O&M) expenditures are sufficient to sustain the flow of productive public capital services to private factors of production. Building on the model of Buffie et al (2012), this paper explores the macroeconomic implications of this recurrent cost problem and its resolution in a context that recognizes that taxation is distortionary. The model is also used to examine stylized fiscal reforms including the replacement of a distortionary output tax with a uniform consumption tax and budgetary reforms that restore O&M expenditures to their efficient levels. These experiments are stylized but clearly demonstrate the material consequences of the tax and public expenditure structures for growth and debt sustainability in low-income countries
Table Of Contents
Cover; Contents; 1. Introduction; 2. A Stripped-Down Version of the Buffie et al. Model; 2.1 Firms; 2.1.1 Technology; 2.1.2 Factor Demands; 2.2 Consumers; 2.3 The Government; 2.3.1 Infrastructure, Public Investment and Efficiency; 2.3.2 Fiscal Adjustment and the Public Sector Budget Constraint; 2.4 Market Clearing Conditions and External Debt Accumulation; 3. Introducing Output Taxation and Operations & Maintenance Expenditure; 3.1 Output Taxation; 3.2 Operations and Maintenance Expenditures; 4. Calibrating Issues; 4.1 Distortions in the Initial Steady States; 4.2 Efficient O & M Expenditures
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (44 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781484365878

Library Locations

  • EP Library Brussels

    60 rue Wiertz, Brussels, B-1047, BE
    Borrow
  • EP Library Luxembourg

    Rue du Fort Thüngen, Luxembourg, L-1313, LU
    Borrow
  • EP Library Strasbourg

    7 Place Adrien Zeller, Allée du Printemps, Strasbourg, F-67070, FR
    Borrow