Long-run growth and welfare in a two sector endogenous growth model with productive and non-productive government expenditure

Rolando A. Escobar-Posada, Goncalo Monteiro

Producción: Contribución a una revistaArtículorevisión exhaustiva

12 Citas (Scopus)

Resumen

We develop a two-sector model of physical and human capital accumulation, where public goods provide both productive capital (i.e. infrastructures) and utility enhancing services. We analyze the impact of both the level of government expenditure and its composition on growth and welfare, under different production technologies, and derive their respective growth and welfare-maximizing levels. We show that contrary to what happens with welfare, the long-run growth rate is increasing in the intertemporal elasticity of substitution but decreasing in the relative weight of public goods in utility. Furthermore, the welfare-maximizing tax rate is lower than the growth-maximizing tax rate, whereas the welfare maximizing share of productive government expenditure is greater than the growth maximizing share. Finally, we employ numerical simulations to get a better understanding of the model.

Idioma originalInglés
Páginas (desde-hasta)218-234
Número de páginas17
PublicaciónJournal of Macroeconomics
Volumen46
DOI
EstadoPublicada - 2015
Publicado de forma externa

Huella

Profundice en los temas de investigación de 'Long-run growth and welfare in a two sector endogenous growth model with productive and non-productive government expenditure'. En conjunto forman una huella única.

Citar esto