Golden Rule (fiscal policy)

About: Golden Rule (fiscal policy) is a research topic. Over the lifetime, 661 publications have been published within this topic receiving 9789 citations.

The Golden Rule with Endogenous Labor Participation Rate

Abstract: The Golden Rule of accumulation in an economy with an endogenously determined growth rate of labor has been examined by Eric Davis. Davis finds that if the growth rate is an increasing function of per capita net income, steady-state per capita consumption is maximized not at the equality of the propensity to save and capital's share of output, but at a propensity to save smaller than capital's share of output and an interest rate which exceeds rather than equals the growth rate. The supply of labor in an economy is affected by both the growth and participation rates of its population. Davis' results and the traditional Golden Rule depend upon the implicit assumption that the latter rate is constant. Davis calls for a more flexible treatment of the participation rate, allowing the possibility of optimal unemployment in a theory of optimal savings. This note examines a simple model with a varying participation rate. It is seen that one common assumption describing the participation rate leads to a recommendation opposite that of Davis.

Fiscal Policy within a Common Currency Area - Growth Implications in the Light of Neoclassical Theory

Abstract: We examine the long-run impact of fiscal policy on economic growth under the conditions of an economic and monetary union (EMU). The analysis is based on the neoclassical growth model of a small (in economic terms) open economy in an EMU. The core assumptions are perfect capital mobility, which results in identical interest rates across the EMU, and perfect mobility of goods, which leads to the convergence of price levels. The model is based on standard neoclassical assumptions, i.e., the output is determined by the Cobb-Douglas production function with a Harrodneutral technical progress and constant returns to scale, capital and labor receive their marginal products, etc. We show that a unique long-run equilibrium exists and is characterized by the socalled natural rate of growth. The necessary and sufficient conditions of global asymptotic stability form a system of three non-trivial inequalities. We argue that in modern economies, these conditions are satisfied, except perhaps for very short periods of time. Furthermore, we show that the golden rules of fiscal policy have the form of an alternative optimal policy that crucially depends on the relation between the real interest rate and the natural rate of growth and on the relations between five other autonomous parameters.

The Golden Rule in Classical Judaism

Abstract: Rabbinic Judaism calls the Golden Rule the encompassing principle of the Torah. But when the system undertakes to generalize, it entirely ignores the Golden Rule. The faithful, this is to say, are admonished to dedicate themselves to studying the generative data of the Golden Rule. But when the system concretely invokes the Golden Rule, it does not elaborate and extend it, analyzing its implications for fresh problems. This article thus proposes that, in classical Judaism, the Golden Rule is inert, not active; it is inconsequential in an exact sense of the word, not weighty in secondary development. It yields nothing beyond itself and does not invite new questions or stimulate speculation about new problems. The Golden Rule emerges as a commonplace that the system invokes without extension and elaboration.

Do no harm: when caregivers violate our golden rule, Part 1.

Abstract: In Part 1, read about the implications involved when caregivers end life with pain medication and when "angels of death" work among them.