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Infrastructure, Public Education and Growth with Congestion Costs

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  • P R Agénor

Abstract

This paper studies the optimal allocation of public expenditure between infrastructure and education services in an endogenous growth framework. Raw labor must be educated to become productive. The balanced-growth path is derived and the transitional dynamics associated with an increase in the share of spending on infrastructure are characterized. The growth-maximizing share is shown to depend on the elasticities of output with respect to both infrastructure services and the supply of educated labor. If the supply of raw labor is increasing in wages, the growth-maximizing share of government spending on infrastructure depends negatively on the degree of congestion in schooling.

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File URL: http://www.socialsciences.manchester.ac.uk/medialibrary/cgbcr/discussionpapers/dpcgbcr47.pdf
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Bibliographic Info

Paper provided by Economics, The Univeristy of Manchester in its series Centre for Growth and Business Cycle Research Discussion Paper Series with number 47.

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Length: 43 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:man:cgbcrp:47

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Citations

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Cited by:
  1. Pierre‐Richard Agénor & Kyriakos C. Neanidis, 2011. "The Allocation Of Public Expenditure And Economic Growth," Manchester School, University of Manchester, vol. 79(4), pages 899-931, 07.
  2. P R Agénor, 2005. "Schooling and Public Capital in a Model of Endogenous Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 61, Economics, The Univeristy of Manchester.
  3. Pierre-Richard Agénor, 2009. "Infrastructure Investment and Maintenance Expenditure: Optimal Allocation Rules in a Growing Economy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(2), pages 233-250, 04.
  4. Pinto Moreira, Emmanuel & Bayraktar, Nihal, 2008. "Foreign aid, growth and poverty: A policy framework for Niger," Journal of Policy Modeling, Elsevier, vol. 30(3), pages 523-539.
  5. Pierre-Richard Agénor, 2005. "Health and Infrastructure in Models of Endogenous Growth," The School of Economics Discussion Paper Series 0539, Economics, The University of Manchester.
  6. P R Agénor & K C Neanidis, 2006. "Corruption Clubs: The Allocation of Public Expenditure and Economic Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 69, Economics, The Univeristy of Manchester.

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