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Two-Sector Growth Models with Productive Public Goods: Equilibrium (In)determinacy

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Author Info

  • Been-Lon Chen

    ()
    (Institute of Economics, Academia Sinica, 128 Academia Road, Section 2, Taipei 11529, Taiwan)

  • Shun-Fa Lee

    ()
    (Department of Industrial Economics, Tamkang University, 151 Ying-chuan Road, Tamsui, Taipei County 25137, Taiwan)

Abstract

In existing two-sector, human capital–based endogenous growth models with social constant returns, local equilibrium indeterminacy emerges based upon either differential factor tax rates or sector-specific externalities. Two primary results are established in this paper. First, once there are productive public goods, the two existing mechanisms are not robust in establishing local indeterminacy. Second, with the congestion effect in the use of public services, local indeterminacy is regained.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 75 (2009)
Issue (Month): 3 (January)
Pages: 639–662

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Handle: RePEc:sej:ancoec:v:75:3:y:2009:p:639-662

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Cited by:
  1. Ratbek Dzhumashev & Emin Gahramanov, 2008. "Can We Tax the Desire for Tax Evasion?," Economics Series 2008_19, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Monica Keneley, 2004. "In the Service of the Society: Labour Management Practices in the Australian Life Insurance Industry to 1940," Economics Series 2004_19, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.

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