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  • Nigar Hashimzade (a1) and Gareth D. Myles (a2)
  • DOI:
  • Published online: 16 November 2010

The paper analyzes a multicountry extension of the Barro model of productive public expenditure. In the presence of positive infrastructural externalities between countries, the provision of infrastructure will be inefficiently low if countries do not coordinate. This provides a role for a supranational body, such as the European Union, to coordinate the policies of the individual governments. It is shown how intervention by a supranational body can raise welfare by internalizing the infrastructural externality. Infrastructural externalities increase the importance of tax policy in the growth process and distribute the benefits of taxation across countries.

Corresponding author
Address correspondence to: Gareth D. Myles, Department of Economics, University of Exeter, Exeter EX6 8HT, UK; e-mail:
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Stephen J. Turnovsky (2004) The transitional dynamics of fiscal policy: Long-run capital accumulation and growth. Journal of Money, Credit and Banking 36, 883910.

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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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