financing of government consumption purchases with an income tax, and monopoly pricing of new types of capital goods. Tax incentives for investment are not called for if the private rate of return on investment equals the social return. This situation applies in growth models if the accumulation of a broad concept of capital does not entail diminishing returns, or if technological progress appears as an expanding variety of consumer products. In growth models that incorporate public services, the optimal tax policy hinges on the characteristics of the services. If the public services are publicly-provided private goods, which are rival and excludable, or publicly-provided public goods, which are non-rival and nonexcludable, then lump-sum taxation is superior to income taxation. Many types of public goods are subject to congestion, and are therefore rival but to some extent non-excludable. In these cases, income taxation works approximately as a user fee and can therefore be superior to lump-sum taxation. In particular, the incentives for investment and growth are too high if taxes are lump sum. We argue that the congestion model applies to a wide array of public expenditures, including transportation facilities, public utilities, courts, and possibly national defence and police. The recent literature on endogenous economic growth has provided some insights into why countries grow at different rates over long periods of time. In some of these models, the government's choices of tax rates and expenditure levels influence the long-term growth rates. The present paper discusses these types of fiscal effects within a variety of models that can generate long-term growth endogenously. The models that we consider assume a closed economy and share a common perspective with respect to household choices on consuming and saving. We begin with the standard model of the representative, infinite-lived household, which seeks to maximize overall utility, as given by