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Corruption Clubs: The Allocation of Public Expenditure and Economic Growth

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Author Info
P R Agénor
K C Neanidis
Abstract

This paper studies the optimal allocation of government spending between health, education, and infrastructure in an endogenous growth framework. In the model, infrastructure a?ects not only the production of goods but also the supply of health and education services. The production of health (education) services depends also on the stock of educated labor (health spending). Transitional dynamics associated with budget-neutral shifts in the composition of expenditure are analyzed, and growth- and welfare-maximizing allocation rules are derived and compared. The discussion highlights the key role played by the parameters that characterize the health and education technologies.

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Paper provided by Economics, The Univeristy of Manchester in its series Centre for Growth and Business Cycle Research Discussion Paper Series with number 69.

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Length: 58 pages
Date of creation: 2006
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Handle: RePEc:man:cgbcrp:69

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  28. P R Agénor, 2005. "Infrastructure, Public Education and Growth with Congestion Costs," Centre for Growth and Business Cycle Research Discussion Paper Series 47, Economics, The Univeristy of Manchester. [Downloadable!]
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