Comparing Macroeconomic Returns on Human and Public Capital: An Empirical Analysis of the Portuguese Case (1960-2001)
Miguel St. Aubyn
Technical University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics)
Technical University of Lisbon (UTL) - Department of Economics; UECE - Research Unit on Complexity in Economics
ISEG Economics Working Paper No. 07/2004/DE/UECE
The impact of human and public capital on growth is a major issue in economic theory and in policy evaluation. Using a cointegrated VAR, we estimate a Cobb-Douglas production function for Portugal with public and human capital. Return rates are then computed with and without dynamic feedbacks. Without these, human capital yields a return comparable to private investment, and smaller than public investment. Considering dynamic feedbacks, private capital responds positively to a shock in public capital, but negatively to a shock in human capital. Consequently, the dynamic feedbacks return on human capital is much lower than on public capital.
Number of Pages in PDF File: 38
Keywords: Human capital, public capital, economic growth, Portugal
JEL Classification: I20, H54, O47working papers series
Date posted: September 19, 2004
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