Some authors have studied the economic growth that are the results of alternative full employment policy. But they had no consideration for the balance of budget.
The first purpose of this paper is a extension of their studies to a model in which public investment and public debt exists. The second purpose is a reconsideration of 'the burden of the debt' in the sense of Domar.
The main assumption are as follows.
1. Output capacity Q is a Cobb=Dougras function of social overhead capital Kp, private capital K, labor L and state of technique, i. e., Q=
beμtK
ραK
βL
τ.α+β<1.
2. Nelson-type investment function and Cornwall-type approac.
3. New issue amount of public debt is deficit of government.
4. Constant rate of interest and complete competition in labor market.
5. Government has three fiscal control variables, i. e., government consumption rate g, tax rate z, public invest rate p.
Government can realize full employment growth by means of to change one of them with constant other variables.
The main results are as follows.
1. In views of long run efficiency of resource allocation and 'the burden of national debt, ' the most desirable policy is the full employment policy which change z (with constant g and p), the second best policy is the policy which change g, and the worst policy is the full employment policy which change p (with constant z and g).
2. High interest rate policy is dangerous policy in views of efficiency of resource allocation and 'the burden of national debt.'
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