Public Financing of Education and Research in a Model of Endogenous Growth
AbstractWe propose a two factor endogenous growth model in which the government intervenes in the economy by financing research and/or education. We allow technology in public production to be different from technology in private production, so that public spending has a direct effect on the rental prices of factors. We characterize both the unique balanced growth path and the transitional dynamics of the model showing the steady state equilibrium to be a saddle point. We also show that while income taxation is distortive, in general, a Pareto optimal outcome can be reached by means of a consumption tax in the decentralized setting. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 1997.
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Bibliographic InfoArticle provided by CEIS in its journal Labour.
Volume (Year): 11 (1997)
Issue (Month): 3 (November)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1121-7081
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- Pierluigi Murro, 2007. "Public Funding for Basic Research in an Endogenous Growth Model," Rivista di Politica Economica, SIPI Spa, vol. 97(6), pages 203-228, November-.
- Gersbach, Hans & Schneider, Maik & Schneller, Olivier, 2010. "Optimal Mix of Applied and Basic Research, Distance to Frontier, and Openness," CEPR Discussion Papers 7795, C.E.P.R. Discussion Papers.
- María Morales, 2004.
"Research policy and endogenous growth,"
Spanish Economic Review,
Springer, vol. 6(3), pages 179-209, October.
- Lai, Chung-hui, 2013. "(In)determinacy, bargaining, and R&D policies in an economy with endogenous technological change," Economics Discussion Papers 2013-14, Kiel Institute for the World Economy.
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