In the context of a standard one‐sector model of endogenous growth, we show that the economy exhibits equilibrium indeterminacy and belief‐driven aggregate fluctuations under progressive taxation of income. When the tax schedule is regressive or flat, the economy's balanced growth path...

This paper analyses environmental fiscal policy within a two-sector endogenous growth model with elastic labour supply. Pollution is modelled as a side product of production. The framework allows us to analyse the consequences of an environmental tax on the economic dynamics. Both transitional...

This paper analyzes the trade-offs between fiscal policy reform and public expenses structures within a two-sector endogenous growth model with an environmental externality. Transitional dynamics, balanced growth path and welfare cost of alternative policy are computed. We show that taxes...