Externalities and Dynamics in Models of "Learning or Doing."
This paper analyzes the dynamics of general equilibrium models with externalities in human capital accumulation which extends that of Uzawa-Lucas. Multiple balanced growth paths, with different growth rates, and a continuum of equilibria (with a unique balanced growth path) may exist. In general, endowment shocks can be followed by higher or lower growth rates. A simple necessary and sufficient condition which depends only on the physical production technology, is established for a positive impact of physical capital on productivity growth. Under the same condition, a sudden removal of capital income taxation lowers welfare. Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Volume (Year): 34 (1993)
Issue (Month): 3 (August)
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