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Composition of Government Expenditures and Demand for Education in Developing Countries

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  • John J Matovu
  • Era Dabla-Norris

Abstract

This paper addresses the potential effects on human capital accumulation and economic growth of the alternative compositions of public expenditures in the context of a computable dynamic general equilibrium model of overlapping generations and heterogeneous agents in which altruistic parents make schooling decisions for their children. In the presence of fixed and variable costs for different levels of schooling, we show that reducing household costs of primary education has the largest positive impact on growth and poverty reduction in the short run. Moreover, an increase in higher education spending increases long-run growth. These effects can be substantial even when increasing education spending comes at the expense of public infrastructure investment.

Suggested Citation

  • John J Matovu & Era Dabla-Norris, 2002. "Composition of Government Expenditures and Demand for Education in Developing Countries," IMF Working Papers 02/78, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:02/78
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    References listed on IDEAS

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    Cited by:

    1. Rossana PatrĂ³n, 2006. "Enhancing the Public Provision of Education: The Economics of Education Reform in Developing Countries," Documentos de Trabajo (working papers) 1106, Department of Economics - dECON.
    2. Mogues, Tewodaj & Ayele, Gezahegn & Paulos, Zelekawork & Fan, Shenggen, 2006. "How Effective is Public Spending? Public Investment Composition and Rural Welfare in Ethiopia," 2006 Annual meeting, July 23-26, Long Beach, CA 21258, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Stefano Paternostro & Anand Rajaram & Erwin R. Tiongson, 2007. "How Does the Composition of Public Spending Matter?," Oxford Development Studies, Taylor & Francis Journals, vol. 35(1), pages 47-82.
    4. World Bank, 2003. "Serbia and Montenegro : Public Expenditure and Institutional Review, Volume 2. Serbia," World Bank Other Operational Studies 14823, The World Bank.
    5. Verbina, Inna & Chowdhury, Abdur R., 2002. "What Determines Public Education Expenditures in a Transition Economy?," WIDER Working Paper Series 060, World Institute for Development Economic Research (UNU-WIDER).

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