Output and consumption at the golden rule steady state

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In the Solow model with taxation, the government’s budget is in balance, i.e., its expenditures are equal to the tax revenues collected (Lty). Suppose that the government runs persistent budget deficits financed by additional direct and indirect taxation. What impact is this likely to have on the levels of investment, capital stock, output and consumption at the Golden Rule steady state?

Reference no: EM131096457

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