Abstract
In this chapter, we investigate positive and normative effects of public spending. Most of the previous literature on government expenditure has investigated the effect of public spending financed by lump-sum taxes (or wage income taxes with exogenous labor supply). The conventional view is that an increase in public spending, which will not contribute to stimulating production has a negative impact on capital formation due to the resource withdrawal effect.
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© 1996 Toshihiro Ihori
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Ihori, T. (1996). Public Spending. In: Public Finance in an Overlapping Generations Economy. Palgrave Macmillan, London. https://doi.org/10.1057/9780230389908_5
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DOI: https://doi.org/10.1057/9780230389908_5
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-39802-7
Online ISBN: 978-0-230-38990-8
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)