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E-grāmata: Public Investment, the Rate of Return, and Optimal Fiscal Policy

(University of Stanford, USA), (Stanford University, USA)
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This book, co-authored by the Nobel-prized economist, Kenneth Arrow, considers public expenditures in the context of modern growth theory. It analyzes optimal growth with public capital. A theory of 'controllability' is developed and injected into public economics and growth models.

Originally published in 1970
Foreword v
Acknowledgments xi
The Format of the Book xii
Summary xii
1 The Basic Issues xiii
2 Economic Policy in a Mixed Economy xv
3 Investment Policy as Optimization over Time xvi
4 The Production and Valuation Assumptions xvii
5 The Publicly Optimal Policy xix
6 Controllability with Fixed Savings Ratio in the Private Sector xxii
7 Controllability with Perfectly Rational Consumers xxvi
8 Risk and the Rate of Return xxvii
9 Some Loose Ends xxviii
I Basic Concepts for the Theory of Public Investment
1(25)
0 Introduction
1(1)
1 The Special Nature of Social Investments
2(3)
2 Decentralization and the Discount Factor Appropriate for Public Investments
5(4)
3 The General Nature of Optimal Investment Policy
9(1)
4 The Criterion Function
10(4)
5 Some Basic Propositions of Neoclassical Growth Theory
14(12)
II Methods of Optimization over time
26(32)
0 Introduction
26(1)
1 Dynamic Programming: Discrete Time, Finite Horizon
26(4)
2 Dynamic Programming: Discrete Time, Infinite Horizon
30(3)
3 Continuous Time, Finite Horizon: The Pontryagin Necessary Conditions
33(6)
4 Continuous Time, Finite Horizon: Constraints Involving the State Variables
39(4)
5 Continuous Time, Finite Horizon: The Sufficiency Theorem
43(2)
6 Continuous Time, Infinite Horizon
45(6)
7 Jumps in the State Variables
51(7)
III Optimal Investment Planning in a one-commodity Model
58(29)
0 Introduction
58(1)
1 Optimization in the One-Sector Model: Informal Discussion
58(6)
2 Optimization in the One-Sector Model: Application of the Pontryagin Maximum Principle
64(9)
3 Interpretations and Approximations
73(8)
4 Alternative Formulations of the Controls and Irreversibility of Investment
81(4)
5 Increasing Returns
85(2)
IV Optimal Investments in a two-sector Model
87(28)
0 Introduction
87(1)
1 General Formulation
88(2)
2 Optimal Growth under Constant Returns to Scale: General Analysis
90(3)
3 Analysis of the Short-Run Equilibrium
93(2)
4 Analysis of the Optimal Path
95(11)
5 Balanced Growth
106(1)
6 The Special Case Ug≡0
107(3)
7 Irreversible Investment Decisions
110(1)
8 Increasing Returns to Scale
110(5)
V Objectives, Markets, and Public Instruments
115(13)
0 Introduction
115(1)
1 Private and Social Objectives
116(1)
2 Market Conditions
117(2)
3 Controllability by Public Instruments
119(2)
4 Second-Best Policy
121(1)
5 The Accounting Identities of Resource Allocation and Public Policy
122(6)
VI Optimal Policy and Controllability with Imperfect Capital Markets
128(25)
0 Introduction
128(1)
1 The General Framework of Fixed-Savings-Ratio Models
128(2)
2 Financing by Income Tax Alone: Controllability
130(1)
3 Financing by Income Tax Alone: General Analysis of the Second-Best Policy
131(3)
4 Financing by Income Tax Alone: Balanced Growth
134(4)
5 Financing by Income Tax Alone: Dynamic Analysis
138(6)
6 Financing Investment by Borrowing and Interest by Income Tax
144(4)
7 Balanced Budget with Consumption and Savings Taxes
148(1)
8 Financing by Borrowing and Taxes on Consumption and Savings
149(2)
9 Appropriability of Return on Government Capital
151(2)
VII Consumer Behavior in a Perfect Market
153(25)
0 Introduction
153(2)
1 The Consumer's Feasibility Condition
155(5)
2 Some Boundedness Assumptions
160(2)
3 Private Sector Optimization and Some Implications
162(7)
Mathematical Appendix
169(9)
VIII Controllability of Public Policy in Perfect Capital Markets
178(31)
0 Introduction
178(2)
1 Some General Characterizations of Controllability and Stability
180(7)
2 Controllability Without Taxes
187(1)
3 The Income Tax
188(4)
4 The Consumption Tax
192(3)
5 The Savings Tax
195(4)
6 The Wages Tax
199(1)
7 Controllability of Both Allocation and Debt With Two Taxes: General Considerations
200(1)
8 Controllability With a Tax on Wages and One Other Tax
201(2)
9 Controllability With Two Taxes, Neither on Wages
203(3)
10 Summary
206(3)
Bibliography 209(6)
Index 215
Arrow, Kenneth J.; Kruz, Mordecai