Departmental Bulletin Paper Public Capital Accumulation, Income Transfers, and Fiscal Sustainability

Ogawa, Hikaru  ,  Kamiguchi, Akira

(E15-4) 2015-05 , 名古屋大学大学院経済学研究科附属国際経済政策研究センター
In this study, we present an endogenous growth model comprising public investment and income transfer, with focus on fiscal sustainability. The main finding of this paper is that the effects of an increase in the public expenditure/GDP ratio on fiscal sustainability evidently depend on how expenditures function. An increase in the income transfer/GDP ratio may create a more sustainable economy, whereas, as previous studies have shown, an increase in the public investment/GDP ratio creates a less sustainable economy. The growth effects of changes in the two ratios are also examined.

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