IDEAS home Printed from https://ideas.repec.org/a/eee/dyncon/v28y2004i4p841-856.html
   My bibliography  Save this article

Multiple equilibria, fiscal policy, and human capital accumulation

Author

Listed:
  • Alonso-Carrera, Jaime
  • Freire-Seren, Maria Jesus

Abstract

This paper shows that in a three-sector model of endogenous growth with physical and human capital accumulation, taxation policy can generate indeterminacy under plausible parameterizations. The key for this result is that the accumulation of human capital is a non-market activity in which individuals combine their non-working time with intermediate goods that are provided by the market. This assumption is consistent with the microfoundations of human capital accumulation found by the literature on life-cycle earnings.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Alonso-Carrera, Jaime & Freire-Seren, Maria Jesus, 2004. "Multiple equilibria, fiscal policy, and human capital accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 28(4), pages 841-856, January.
  • Handle: RePEc:eee:dyncon:v:28:y:2004:i:4:p:841-856
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165-1889(03)00063-0
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stokey, Nancy L & Rebelo, Sergio, 1995. "Growth Effects of Flat-Rate Taxes," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 519-550, June.
    2. Benhabib, Jess & Farmer, Roger E.A., 1999. "Indeterminacy and sunspots in macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 6, pages 387-448, Elsevier.
    3. Alonso-Carrera, Jaime, 2000. "The Subsidy to Human Capital Accumulation in an Endogenous Growth Model: A Comparative Dynamics Analysis," Journal of Macroeconomics, Elsevier, vol. 22(3), pages 409-431, July.
    4. Jess Benhabib & Qinglai Meng & Kazuo Nishimura, 2012. "Indeterminacy Under Constant Returns to Scale in Multisector Economies," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 403-412, Springer.
    5. Benhabib Jess & Perli Roberto, 1994. "Uniqueness and Indeterminacy: On the Dynamics of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 63(1), pages 113-142, June.
    6. Perli, Roberto & Sakellaris, Plutarchos, 1998. "Human capital formation and business cycle persistence," Journal of Monetary Economics, Elsevier, vol. 42(1), pages 67-92, June.
    7. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 11-44, August.
    8. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time and Goods over the Life Cycle," NBER Books, National Bureau of Economic Research, Inc, number ghez75-1, October.
    9. Casey B. Mulligan & Xavier Sala-i-Martin, 1993. "Transitional Dynamics in Two-Sector Models of Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 739-773.
    10. Bond, Eric W. & Wang, Ping & Yip, Chong K., 1996. "A General Two-Sector Model of Endogenous Growth with Human and Physical Capital: Balanced Growth and Transitional Dynamics," Journal of Economic Theory, Elsevier, vol. 68(1), pages 149-173, January.
    11. Benhabib, Jess & Gali, Jordi, 1995. "On growth and indeterminacy: some theory and evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 43(1), pages 163-211, December.
    12. Mino, Kazuo, 1996. "Analysis of a Two-Sector Model of Endogenous Growth with Capital Income Taxation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 227-251, February.
    13. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Goods Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 46-82, National Bureau of Economic Research, Inc.
    14. Gilbert Ghez & Gary S. Becker, 1975. "A Theory of the Allocation of Time and Goods Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 1-45, National Bureau of Economic Research, Inc.
    15. Jones, Larry E & Manuelli, Rodolfo E & Rossi, Peter E, 1993. "Optimal Taxation in Models of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 485-517, June.
    16. Mino, Kazuo, 2001. "Indeterminacy and Endogenous Growth with Social Constant Returns," Journal of Economic Theory, Elsevier, vol. 97(1), pages 203-222, March.
    17. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time Over the Life Cycle," NBER Chapters, in: The Allocation of Time and Goods over the Life Cycle, pages 83-132, National Bureau of Economic Research, Inc.
    18. Jean-Pierre Drugeon & Odile Poulsen & Alain Venditti, 2003. "On Intersectoral allocations, factors substitutability and multiple long-run growth paths," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 175-183, January.
    19. Ortigueira, Salvador, 1998. "Fiscal policy in an endogenous growth model with human capital accumulation," Journal of Monetary Economics, Elsevier, vol. 42(2), pages 323-355, July.
    20. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gaspar, J. & Vasconcelos, P.B. & Afonso, O., 2014. "Economic growth and multiple equilibria: A critical note," Economic Modelling, Elsevier, vol. 36(C), pages 157-160.
    2. Wei-Bin ZHANG, 2014. "Gender Discrimination, Education and Economic Growth in a Generalized Uzawa-Lucas Two-Sector Model," Timisoara Journal of Economics and Business, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 7(1), pages 1-34.
    3. Nihal BAYRAKTAR & Emmanuel PINTO MOREIRA, 2008. "The Composition of Public Expenditure and Growth: A Small-scale Intertemporal Model for Low-Income Countries," EcoMod2008 23800009, EcoMod.
    4. d'Albis, Hippolyte & Le Van, Cuong, 2006. "Existence of a competitive equilibrium in the Lucas (1988) model without physical capital," Journal of Mathematical Economics, Elsevier, vol. 42(1), pages 46-55, February.
    5. Cipriani, Giam Pietro & Makris, Miltiadis, 2007. "Indeterminacy, intergenerational redistribution, endogenous longevity and human capital accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 31(2), pages 613-633, February.
    6. José Gaspar & Liliana Garrido-da-Silva & Paulo B. Vasconcelos & Óscar Afonso, 2023. "Local and global indeterminacy and transition dynamics in a growth model with public goods," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(2), pages 271-314, May.
    7. Wei-Bin Zhang, 2014. "Endogenous population with human and physical capital accumulation," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(3), pages 231-252, September.
    8. Wei-Bin Zhang, 2016. "Impact of Education Subsidies and Taxation on Wealth and Human Capital Accumulation," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 2(3), pages 222-247.
    9. Bayraktar, Nihal & Moreira, Emmanuel Pinto, 2007. "The composition of public expenditure and growth : a small-scale intertemporal model for low-income countries," Policy Research Working Paper Series 4430, The World Bank.
    10. Chakraborty, Bidisha & Gupta, Manash Ranjan, 2009. "Human capital, inequality, endogenous growth and educational subsidy: A theoretical analysis," Research in Economics, Elsevier, vol. 63(2), pages 77-90, June.
    11. Hosoya, Kei, 2012. "Growth and multiple equilibria: A unique local dynamics," Economic Modelling, Elsevier, vol. 29(5), pages 1662-1665.
    12. Wei-Bin, ZHANG, 2015. "Economic Oscillations With Endogenous Population, Human Capital And Wealth," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 6(2), pages 9-26.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Philip Trostel & Ian Walker, 2006. "Education and Work," Education Economics, Taylor & Francis Journals, vol. 14(4), pages 377-399.
    2. Been‐Lon Chen & Shun‐Fa Lee, 2012. "Intersectoral Spillovers, Relative Prices and Development Traps," Review of Development Economics, Wiley Blackwell, vol. 16(2), pages 243-261, May.
    3. Turnovsky, S., 2000. "Growth in an Open Economy: some Recent Developments," Papers 5, Warwick - Development Economics Research Centre.
    4. Been-Lon Chen & Shun-Fa Lee, 2009. "General Fund Financing, Earmarking, Economic Stabilization, and Welfare," Public Finance Review, , vol. 37(5), pages 507-538, September.
    5. Pedro Garcia-Castrillo & Marcos Sanso, 2000. "Human Capital and Optimal Policy in a Lucas-type Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 757-770, October.
    6. Been-Lon Chen & Shun-Fa Lee, 2005. "Congestible Public Goods and Indeterminacy in a Two-sector Endogenous Growth Model," IEAS Working Paper : academic research 05-A003, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    7. Brito, Paulo & Venditti, Alain, 2010. "Local and global indeterminacy in two-sector models of endogenous growth," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 893-911, September.
    8. Ladron-de-Guevara, Antonio & Ortigueira, Salvador & Santos, Manuel S., 1997. "Equilibrium dynamics in two-sector models of endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 115-143, January.
    9. Milesi-Ferretti, Gian Maria & Roubini, Nouriel, 1998. "On the taxation of human and physical capital in models of endogenous growth," Journal of Public Economics, Elsevier, vol. 70(2), pages 237-254, November.
    10. Chaitali Sinha, 2014. "Human Capital and Public Policy," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(1), pages 79-125, June.
    11. Kazuo Mino & Kazuo Nishimura & Koji Shimomura & Ping Wang, 2008. "Equilibrium dynamics in discrete-time endogenous growth models with social constant returns," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 34(1), pages 1-23, January.
    12. Chen, Been-Lon & Lee, Shun-Fa, 2008. "Corrigendum to "Congestible public goods and local indeterminacy: A two-sector endogenous growth model": [Journal of Economic Dynamics & Control 31 (7) (2007) 2486-2518]," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1356-1356, April.
    13. García-Belenguer, Fernando, 2006. "Stability, Global Dynamics and Markov Equilibrium in Models of Economic Growth," Working Papers in Economic Theory 2006/05, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    14. Been‐Lon Chen & Shun‐Fa Lee, 2009. "Two‐Sector Growth Models with Productive Public Goods: Equilibrium (In)determinacy," Southern Economic Journal, John Wiley & Sons, vol. 75(3), pages 639-662, January.
    15. Garcia-Belenguer, Fernando, 2007. "Stability, global dynamics and Markov equilibrium in models of endogenous economic growth," Journal of Economic Theory, Elsevier, vol. 136(1), pages 392-416, September.
    16. Gomez Suarez, Manuel A., 2008. "Utility and production externalities, equilibrium efficiency and leisure specification," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1496-1519, December.
    17. Nishimura, Kazuo & Venditti, Alain, 2004. "Indeterminacy And The Role Of Factor Substitutability," Macroeconomic Dynamics, Cambridge University Press, vol. 8(4), pages 436-465, September.
    18. Azariadis, Costas & Chen, Been-Lon & Lu, Chia-Hui & Wang, Yin-Chi, 2013. "A two-sector model of endogenous growth with leisure externalities," Journal of Economic Theory, Elsevier, vol. 148(2), pages 843-857.
    19. Chen, Been-Lon, 2007. "Factor taxation and labor supply in a dynamic one-sector growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3941-3964, December.
    20. Tobing, Elwin, 2011. "Taxation, human capital formation, and long-run growth with private investment in education," Journal of Asian Economics, Elsevier, vol. 22(1), pages 48-60, February.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:dyncon:v:28:y:2004:i:4:p:841-856. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jedc .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.