Balanced Budget Government Spending in a Small Open Regional Economy

Lecca, Patrizio and McGregor, Peter and Swales, Kim (2010) Balanced Budget Government Spending in a Small Open Regional Economy. Discussion paper. University of Strathclyde, Glasgow.

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Abstract

This paper investigates the impact of a balanced budget fiscal policy expansion in a regional context within a numerical dynamic general equilibrium model. We take Scotland as an example where, recently, there has been extensive debate on greater fiscal autonomy. In response to a balanced budget fiscal expansion the model suggests that: an increase in current government purchase in goods and services has negative multiplier effects only if the elasticity of substitution between private and public consumption is high enough to move downward the marginal utility of private consumers; public capital expenditure crowds in consumption and investment even with a high level of congestion; but crowding out effects might arise in the short-run if agents are myopic.

  • Item type:Monograph(Discussion paper)
    ID code:67817
    Dates:
    Date
    Event
    2010
    Published
    Notes:Published as a paper within the Discussion Papers in Economics, No. 10-20 (2010)
    Subjects:Social Sciences > Economic Theory
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:14 May 2019 12:51
    Last modified:09 Apr 2024 04:42
    URI:https://strathprints.strath.ac.uk/id/eprint/67817
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