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Comparing macroeconomic returns on human and public capital: An empirical analysis of the Portuguese case (1960-2001)

  • Pina, Alvaro Manuel
  • St. Aubyn, Miguel

The impact of human and public capital on growth is a major issue in economic theory and in policy evaluation. Using a cointegrated VAR, we estimate a Cobb-Douglas production function for Portugal with public and human capital. Return rates are then computed with and without dynamic feedbacks. Without these, human capital yields a return comparable to private investment, and smaller than public investment. Considering dynamic feedbacks, private capital responds positively to a shock in public capital, but negatively to a shock in human capital. Consequently, the dynamic feedbacks return on human capital is much lower than on public capital.

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Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 27 (2005)
Issue (Month): 5 (July)
Pages: 585-598

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Handle: RePEc:eee:jpolmo:v:27:y:2005:i:5:p:585-598
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