Public Expenditure Composition And Growth: A Neo-Kaleckian Analysis
In this paper, we put forward a neo-Kaleckian model of growth and dsitribution. We introduce two different types of public expenditure: government consumption expenditure and public provision of capital; and we study the effects on equilibrium capacity utilisation and growth. Two different cases are explored: a) the government size is allowed to vary; b) the government size is fixed and only the composition of public expenditure changes. Our results depart from those drawn by the New Growth Theory. In fact, when capacity is underutilised, and increase in the provision of public capital may reduce the rate of growth, if not accompanied by a sufficient increase in demand.
Volume (Year): (2011)
Issue (Month): 61 ()
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