The paper investigates how changes in fiscal policy can affect relative prices, composition of private consumption, growth and welfare in a two-country, overlapping generations model of endogenous growth. We develop a simple framework that combines Blanchard-type consumers with uncertain...

Within the Barro (1990) model of productive public services, but with the inclusion of public debt, we derive and characterize on the balanced growth path, a set of welfare maximizing fiscal rules under two budgetary regimes - one with only the standard dynamic government budget constraint, and...