This paper studies the effects of fiscal policies -- depicted as stochastic changes in government spending and distortionary tax rates -- when the government cannot use lump sum taxes to achieve intertemporal budget balance. This framework contrasts the more standard analysis in which spending...

This paper studies the effects of fiscal policies -- depicted as stochastic changes in government spending and distortionary tax rates -- when the government is constrained from using lump sum taxes for achieving intertemporal budget balance. The ratio of debt to gnp, therefore, has consequences...

This paper presents a model economy in which the 'balanced' growth is determined endogenously. The growth process in this economy does not depend on exogenous specifications such as human capital accumulation or technological progress. Rather, it is determined within the model and governed by...