Stabilization Policy, Learning by Doing, and Economic Growth
AbstractThis paper shows that fiscal policy, when used for stabilization purposes, can have a positive effect on the economy's growth, on human capital accumulation, and on welfare, along the transition path. We introduce symmetric productivity shocks into a model in which productivity is augmented through learning by doing. If future benefits of learning by doing are not fully internalized by workers, then recessions are periods in which opportunities for acquiring experience are foregone. We identify configurations of disturbances and other parameters for which a countercyclical policy maximizes growth and welfare.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1130.
Date of creation: Feb 1995
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Other versions of this item:
- Martin, Philippe & Rogers, Carol Ann, 1997. "Stabilization Policy, Learning-by-Doing, and Economic Growth," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 152-66, April.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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