International Journal of Engineering and Manufacturing (IJEM)
IJEM Vol. 2, No. 4, 29 Aug. 2012
Cover page and Table of Contents: PDF (size: 210KB)
Government Expenditures, Transfer Payments and Economic Growth
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Author(s)
Lai Yue
1,*
Cheng Tianzhu
1
Index Terms
Government expenditures, transfer payments, fiscal decentralization, economic growth
Abstract
Incorporating a two-level government structure into an endogenous growth model, we distinguished between productive and non-productive government expenditures. With transfer payments considered, we showed that (1) there was an “Inverted U-shaped” relationship between the tax rate and the long-run economic growth, so was the relationship between the degree of fiscal decentralization and the long-run economic growth; (2) optimal ratios between productive and non-productive expenditures of two levels of governments, between transfer payments and other parts of expenditures of the state-level governments are needed to maximize the long-run economic growth.
Cite This Paper
Lai Yue,Cheng Tianzhu,"Government Expenditures, Transfer Payments and Economic Growth", IJEM, vol.2, no.4, pp.93-100, 2012. DOI: 10.5815/ijem.2012.04.12
Reference
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