Government finance and endogenous growth

Michel Strawczynski*, Momi Dahan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


A crucial assumption for the solution of the endogenous growth model with government intervention is a balanced budget along the perpetual steady state. This assumption is unreal once we are interested to test the model using government data, given that in most countries the budget is not balanced. In this letter we adopt the well-known rule of 'tax smoothing' in order to make this assumption a realistic one. According to our approach the relevant variable for the implementation of a balanced budget is permanent government expenses. The empirical performance of the model is characterized using Israeli data.

Original languageAmerican English
Pages (from-to)789-791
Number of pages3
JournalApplied Economics Letters
Issue number12
StatePublished - Dec 1996
Externally publishedYes


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