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소득평등과 경제성장을 위한 정부의 재정정책
Reports NRF is supported by Research Projects( 소득평등과 경제성장을 위한 정부의 재정정책 | 2006 Year 신청요강 다운로드 PDF다운로드 | 박현(경희대학교) ) data is submitted to the NRF Project Results
Researcher who has been awarded a research grant by Humanities and Social Studies Support Program of NRF has to submit an end product within 6 months(* depend on the form of business)
  • Researchers have entered the information directly to the NRF of Korea research support system
Project Number B00219
Year(selected) 2006 Year
the present condition of Project 종료
State of proposition 재단승인
Completion Date 2007년 08월 29일
Year type 결과보고
Year(final report) 2007년
Research Summary
  • Korean
  • 본 논문은 성장하는 경제의 최적 재정정책을 동태적 일반균형모형을 통해서 분석한다. 정부의 정책을 크게 생산성, 소비성과 재분배성 재정지원으로 분류한다. 재정정책이 외생적인 경우에는 성장률과 조세율 사이의 비선형적 성질을 보여준다. 반면에, 재정정책이 내생적인 경우에는 성장률과 조세율 사이에는 역의 관계를 보여준다. 위 결과들은 재정정책과 성장률은 단조적 양의 관계나 단조적 음의 관계로 설명할 수 없으며, 재정정책 분석은 비선형모형의 채택이 바람직함을 의미한다. 또한, 실증분석의 결과가 독립변수의 차원에 따라 달라지므로 기존 실증분석 결과에 대한 재해석이 필요하다.
  • English
  • This paper continues the study of optimal fiscal policy in a growing economy by exploring a case in which the government simultaneously provides three main categories of expenditures with distortionary tax finance: public production services, public consumption services, and state-contingent redistributive transfers. The paper shows that in a general equilibrium model with given exogenous fiscal policy, a nonlinear relation exists between the suboptimal long-run growth rate in a competitive economy and distortionary tax rates. When fiscal policy is endogenously chosen at a social optimum, the relation between the rate of growth and tax rates is always negative. These two conclusions suggest that the interaction between fiscal policy and growth may be complicated enough that it cannot be captured in a simple linear model using an aggregate measure of fiscal policy. Moreover, this study shows how empirical studies for growth and fiscal policies critically depend on the choice of independent policy variables in standard growth regressions.
Research result report
  • Abstract
  • This paper continues the study of optimal fiscal policy in a growing economy by exploring a case in which the government simultaneously provides three main categories of expenditures with distortionary tax finance: public production services, public consumption services, and state-contingent redistributive transfers. The paper shows that in a general equilibrium model with given exogenous fiscal policy, a nonlinear relation exists between the suboptimal long-run growth rate in a competitive economy and distortionary tax rates. When fiscal policy is endogenously chosen at a social optimum, the relation between the rate of growth and tax rates is always negative. These two conclusions suggest that the interaction between fiscal policy and growth may be complicated enough that it cannot be captured in a simple linear model using an aggregate measure of fiscal policy. Moreover, this study shows how empirical studies for growth and fiscal policies critically depend on the choice of independent policy variables in standard growth regressions.
  • Research result and Utilization method
  • The main focus of this paper is to study the effects of fiscal policy on economic growth and income equality in a growing economy. As previously stated, a government simultaneously provides consumptive, productive, and redistributive spending. That is, I explicitly decompose allocative and redistributive government activities. I then consider the relation between a particular policy instrument and economic growth when a set of policy instruments is chosen both exogenously and endogenously. When fiscal policy is endogenously determined, I also consider implementation conditions for a decentralized competitive economy. I am especially interested in the productivity associated with each policy instrument among the four categories of fiscal policy, as well as the net cost and benefit of government activities in terms of economic growth. I also explain the source of fragile empirical results of endogenous growth models by focusing on theoretical investigation of composition of government expenditure.

    My analysis shows that an inverse U-shaped relationship exists between tax rates and growth rates when the fiscal policy is exogenous. However, when fiscal policy is endogenously chosen at a social optimum, the relation between the growth rate and tax rates is always negative. That is, the nonlinear hump relation between growth and taxes disappears. These two results imply that the different properties of exogenous and endogenous fiscal policy theoretically account for the difference in the relation between growth and fiscal policy in empirical studies. As argued by Rodrik (2005) and Cooley and LeRoy (1981), these differences show how empirical studies for growth and fiscal policies critically depend on the choice of independent policy variables in growth regressions. In addition, an alternative decomposition of government spending may affect the response of private sector investment to fiscal policy. This problem is fundamental for the identification of exogenous and endogenous variables in empirical studies in endogenous growth models.

    This paper also demonstrates simple empirical evidence for the difference between exogenous and endogenous fiscal policy in cross-country data. As in exogenous fiscal policies, fiscal policy (here, income tax rates) has a nonlinear effect on the growth rate. For this regression analysis, I also include institutional variables (e.g., Barro, 1991; Mauro, 1995). The statistical significance of an index of effectiveness of institutions, including regional dummies, implies that a government’s implementation abilities conditionally affect economic growth and income distribution. As in endogenous fiscal policies, I also find a negative association between the growth rate and income redistribution, which is consistent with political economy literature (Benhabib and Rustichini, 1996), along with a negative relation between consumptive spending and income inequality (Chu, Davoodi, and Gupta, 2004). In addition, as expected both in endogenous and exogenous policies, I find a negative relation between tax rates and productive government spending. However, we need to be careful to interpret estimated coefficients from such empirical analyses in the presence of the policy endogenity problem.
  • Index terms
  • allocative and redistributive policy, nonlinearity, policy endogeneity
  • List of digital content of this reports
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