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Policy Variability, Productive Spending and Growth

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  • DIMITRIOS VARVARIGOS

Abstract

In this paper I present two models with policy variability arising from randomness in the provision of productive public spending. In the first model, public spending enters as an input in output production. In this case I find that the relationship between policy variability and growth depends critically on the technological parameters of the production function. In the second model, public spending enters as an input in the education sector of the economy. In this case I find that policy variability retards growth as individuals respond to increased uncertainty by actually reducing rather than increasing their investment in human capital.

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  • Dimitrios Varvarigos, 2007. "Policy Variability, Productive Spending and Growth," Economica, London School of Economics and Political Science, vol. 74(294), pages 299-313, May.
    • Handle: RePEc:bla:econom:v:74:y:2007:i:294:p:299-313
    DOI: 10.1111/j.1468-0335.2006.00550.x
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    Cited by:

    1. The Anh Pham, 2018. "Policy volatility and growth," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 17(2), pages 87-97, July.
    2. J. Stephen Ferris & Marcel-Cristian Voia, 2021. "Elections, economic outcomes and policy choices in Canada: 1870 – 2015," Applied Economics, Taylor & Francis Journals, vol. 53(16), pages 1840-1855, April.
    3. Abbi M Kedir & Nor Yasmin Mhd Bani, 2012. "Panel Data Evidence on the Role of Education in the Growth-Volatility Relationship," Discussion Papers in Economics 12/04, Division of Economics, School of Business, University of Leicester.
    4. Theodore Palivos & Dimitrios Varvarigos, 2013. "Intergenerational Complementarities in Education, Endogenous Public Policy, and the Relation Between Growth and Volatility," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(2), pages 249-272, April.
    5. Dimitrios Varvarigos, 2007. "Volatile public spending in a model of money and sustainable growth," Discussion Paper Series 2007_18, Department of Economics, Loughborough University, revised Jul 2007.
    6. Varvarigos, Dimitrios, 2010. "Inflation, volatile public spending, and endogenously sustained growth," Journal of Economic Dynamics and Control, Elsevier, vol. 34(10), pages 1893-1906, October.
    7. Dimitrios Varvarigos, 2010. "Inflation, Volatile Public Spending, and Endogenously Sustained Growth," Post-Print hal-00732760, HAL.
    8. Keith Blackburn & Dimitrios Varvarigos, 2008. "Human capital accumulation and output growth in a stochastic environment," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 36(3), pages 435-452, September.

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