A random endogenous economic growth model and equilibrium analysis

Abstract

In this paper, a new random endogenous economic growth model is proposed by introducing an elastic labour supply to a simple AK model. The economic equilibrium of decentralized economy is analysed, and the influences of distorted taxes, government public spending and public consumption on fiscal policy are discussed. Based on these results, equilibrium growth rate and the corresponding economic rules are obtained, and the optimal fiscal policies are given. © 2012 Springer-Verlag GmbH.