Fiscal policies and the terms of trade in an endogenous growth model with overlapping generations

Iannis A. Mourmouras, Sugata Ghosh

    Research output: Contribution to journalArticle

    Abstract

    The paper investigates how changes in fiscal policy can affect relative prices, composition of private consumption, growth and welfare in a two-country, overlapping generations model of endogenous growth. We develop a simple framework that combines Blanchard-type consumers with uncertain lifetimes with an endogenous growth model à la Romer, in which there are production externalities from the capital stock of other firms at home and abroad. The basic insight is to highlight, within an optimizing set-up, the growth and terms of trade effects of fiscal policies, with emphasis on welfare considerations.

    Original languageEnglish
    Pages (from-to)445-470
    Number of pages26
    JournalJournal of Macroeconomics
    Volume22
    Issue number3
    Publication statusPublished - Jun 2000

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