Abstract

http://ssrn.com/abstract=1324572
 
 

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Welfare Implications of Public Education Spending Rules


Konstantinos Angelopoulos


Athens University of Economics and Business - Department of International and European Economic Studies

Jim Malley


University of Glasgow - Department of Economics

Apostolis Philippopoulos


Athens University of Economics and Business - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); University of Essex

December 1, 2008

CESifo Working Paper Series No. 2510

Abstract:     
In this paper, we quantitatively assess the welfare implications of alternative public education spending rules. To this end, we employ a dynamic stochastic general equilibrium model in which human capital externalities and public education expenditures, financed by distorting taxes, enhance the productivity of private education choices. We allow public education spending, as share of output, to respond to various aggregate indicators in an attempt to minimize the market imperfection due to human capital externalities. We also expose the economy to varying degrees of uncertainty via changes in the variance of total factor productivity shocks. Our results indicate that, in the face of increasing aggregate uncertainty, active policy can significantly outperform passive policy (i.e. maintaining a constant public education to output ratio) but only when the policy instrument is successful in smoothing the growth rate of human capital.

Number of Pages in PDF File: 39

Keywords: education spending, growth, welfare

JEL Classification: A00, E60, E62

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Date posted: January 9, 2009  

Suggested Citation

Angelopoulos, Konstantinos and Malley, Jim and Philippopoulos, Apostolis, Welfare Implications of Public Education Spending Rules (December 1, 2008). CESifo Working Paper Series No. 2510. Available at SSRN: http://ssrn.com/abstract=1324572

Contact Information

Konstantinos Angelopoulos (Contact Author)
Athens University of Economics and Business - Department of International and European Economic Studies ( email )
GR-10434 Athens
Greece
Jim Malley
University of Glasgow - Department of Economics ( email )
Adam Smith Building
Glasgow, Scotland G12 8RT
United Kingdom
+44 141 330 4617 (Phone)
+44 141 330 4940 (Fax)
HOME PAGE: http://www.gla.ac.uk/economics/malley/
Apostolis Philippopoulos
Athens University of Economics and Business - Department of Economics ( email )
76 Patission Street
GR-10434 Athens
Greece
+301 322 3187 (Phone)
CESifo (Center for Economic Studies and Ifo Institute for Economic Research) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany
University of Essex ( email )
Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom
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