Schooling and Public Capital in a Model of Endogenous Growth

25 Pages Posted: 24 Jan 2011

Date Written: April 28, 2009

Abstract

This paper studies the allocation of public spending between education services and infrastructure investment in an endogenous growth model of a developing economy where public capital in infrastructure affects human capital accumulation. The balanced growth path is derived and the possibility of local indeterminacy is discussed. Dynamics associated with a budget-neutral reallocation of spending from education to infrastructure are studied through numerical simulations. The growth-maximizing share of investment in infrastructure is shown to depend on the goods production technology and the productiveness of infrastructure in the schooling technology. Properties of the welfare-maximizing solution are also discussed.

Suggested Citation

Agnor, Pierre-Richard, Schooling and Public Capital in a Model of Endogenous Growth (April 28, 2009). Economica, Vol. 78, No. 309, pp. 108-132, 2009, Available at SSRN: https://ssrn.com/abstract=1746619 or http://dx.doi.org/10.1111/j.1468-0335.2009.00794.x

Pierre-Richard Agnor (Contact Author)

University of Manchester

Oxford Road
Manchester, N/A M13 9PL
United Kingdom

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