Government spending and fiscal rules in a simple endogenous growth model

Abstract

Bu tez Kamu finansmaninin altin kurali olarak da bilinen ve devletin yalnizca altyapiyatirimlari icin borclanmasina olanak saglayan ?Altin Kural? ile standart faiz disi fazla hedefimali kisitlamalarinin buyume ve kamu finansmani uzerindeki etkisini altyapi ve saglikharcamalarinin uretken oldugu endojen bir buyume modelinde incelemektedir. Modelde paraolmamakla birlikte develetin tek gelir kaynagi uretim ve faiz geliri uzerinden aldigi vergiolarak varsayilmistir. Modelin lineer olmayan ve karmasik yapisi nedeniyle analitik cozumunyerine model t+50 icin simulasyonla cozulmustur. Secilen parametrelerle Altin Kural'inbuyume ve dengeye yakinsama acisindan faiz disi fazla kuralindan daha iyi performansgosterdigi bulunmustur. Ayrica, sonuclar altyapi haricindeki uretken devlet harcamalarindabu tarz kurallarla kisitlamaya gidilmesinin buyumeye ve kamu dengesine olumsuz etkileryapabilecegini gostermistir.

This thesis attempts to analyze the implications of imposing a Golden Rule of public finance(where the government is allowed to borrow for infrastructure investment) and a standardPrimary Surplus Rule on fiscal balances and growth in an endogenous growth model withproductive public infrastructure and health spending. I assume a closed economy with nomoney creation so the government?s only source of revenue is taxes on output and interestincome. Due to the high complexity and non-linearity of the model, numerical simulations areperformed to analyze the transitional dynamics following various shocks. It is shown, underthe calibrated parameter values that the Golden Rule performs better in terms of growth andspeed of convergence than the primary surplus rule. Further, the numerical simulations alsoshow that constraining the government to borrow for other forms of productive spending suchas health through fiscal rules may entail significant growth and debt-reduction costs.