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Linking consumption externalities with optimal accumulation of human and physical capital and intergenerational transfers

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  • Bishnu, Monisankar

Abstract

This paper opens a new perspective from which one can explain the presence of government intervention in education even in the absence of human capital externality. It argues that consumption externalities can provide rationale for government intervention in education. Within the context of overlapping generations economy, it has also been shown that competitive equilibrium either underaccumulates both physical and human capital or overaccumulates both. Thus the result rules out the possibility of competitive equilibrium deviating from the social optimum in its allocation of physical and human capital in opposite directions. Immediate policy issues have also been discussed.
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Suggested Citation

  • Bishnu, Monisankar, 2013. "Linking consumption externalities with optimal accumulation of human and physical capital and intergenerational transfers," Staff General Research Papers Archive 36385, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:36385
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    Cited by:

    1. Monisankar Bishnu & Cagri Kumru, 2020. "A Note on the Annuity Role of Estate Tax - ONLINE SUPPLEMENT," ANU Working Papers in Economics and Econometrics 2020-676, Australian National University, College of Business and Economics, School of Economics.
    2. Barnett, Richard C. & Bhattacharya, Joydeep & Bunzel, Helle, 2019. "The fight-or-flight response to the Joneses and inequality," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 187-210.
    3. Bishnu, Monisankar & Wang, Min, 2017. "The political intergenerational welfare state," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 93-110.
    4. Richard Barnett & Joydeep Bhattacharya & Helle Bunzel, 2016. "The Fight-or-Flight Response to the Joneses," School of Economics Working Paper Series 2016-12, LeBow College of Business, Drexel University.
    5. Monisankar Bishnu & Min Wang, 2013. "The Political intergenerational welfare state: A Unified framework," Discussion Papers 13-08, Indian Statistical Institute, Delhi.
    6. Varvarigos, Dimitrios & Arsenis, Panagiotis, 2015. "Corruption, fertility, and human capital," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 145-162.
    7. Torben Andersen & Joydeep Bhattacharya, 2020. "Intergenerational Debt Dynamics Without Tears," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 192-219, January.
    8. Elena Rey & Miguel-Angel Lopez-Garcia, 2019. "Optimal public policy à la Ramsey in an endogenous growth model," Journal of Economics, Springer, vol. 128(2), pages 99-118, October.
    9. Torben M. Andersen & Joydeep Bhattacharya, 2013. "The Intergenerational Welfare State," CESifo Working Paper Series 4359, CESifo.
    10. Bishnu, Monisankar & Garg, Shresth & Garg, Tishara & Ray, Tridip, 2023. "Intergenerational transfers: Public education and pensions with endogenous fertility," Journal of Economic Dynamics and Control, Elsevier, vol. 153(C).
    11. Zeng, Jinli & Zhang, Jie, 2022. "Education policies and development with threshold human capital externalities," Economic Modelling, Elsevier, vol. 108(C).
    12. Ono, Tetsuo & Uchida, Yuki, 2018. "Capital Income Taxation, Economic Growth, and the Politics of Public Education," MPRA Paper 86523, University Library of Munich, Germany.
    13. Bishnu, Monisankar & Garg, Shresth & Garg, Tishara & Ray, Tridip, 2021. "Optimal intergenerational transfers: Public education and pensions," Journal of Public Economics, Elsevier, vol. 198(C).
    14. Amol Amol & Monisankar Bishnu & Tridip Ray, 2023. "Pension, possible phaseout, and endogenous fertility in general equilibrium," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(2), pages 376-406, April.
    15. Uchida, Yuki & Ono, Tetsuo, 2021. "Generational conflict and education politics: Implications for growth and welfare," Journal of Macroeconomics, Elsevier, vol. 69(C).
    16. Joydeep Bhattacharya & Monisankar Bishnu & Min Wang, 2024. "Credit Markets with Time‐Inconsistent Agents and Strategic Loan Default," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(7), pages 1803-1831, October.
    17. Li, Bei & Zhang, Jie, 2015. "Efficient education subsidization and the pay-as-you-use principle," Journal of Public Economics, Elsevier, vol. 129(C), pages 41-50.
    18. Uchida, Yuki & Ono, Tetsuo, 2024. "Life expectancy and politics of public education and pension with endogenous fertility," Journal of Economic Dynamics and Control, Elsevier, vol. 168(C).
    19. Barnett, Richard C. & Bhattacharya, Joydeep & Bunzel, Helle, 2018. "The Fight-or-Flight Response to the Joneses and Income Inequality," ISU General Staff Papers 201812120800001060, Iowa State University, Department of Economics.

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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