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Corruption Clubs: The Allocation of Public Expenditure and Economic Growth

  • P R Agénor
  • K C Neanidis
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    This paper studies the optimal allocation of government spending between health, education, and infrastructure in an endogenous growth framework. In the model, infrastructure a?ects not only the production of goods but also the supply of health and education services. The production of health (education) services depends also on the stock of educated labor (health spending). Transitional dynamics associated with budget-neutral shifts in the composition of expenditure are analyzed, and growth- and welfare-maximizing allocation rules are derived and compared. The discussion highlights the key role played by the parameters that characterize the health and education technologies.

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    File URL: http://www.socialsciences.manchester.ac.uk/medialibrary/cgbcr/discussionpapers/dpcgbcr69.pdf
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    Paper provided by Economics, The Univeristy of Manchester in its series Centre for Growth and Business Cycle Research Discussion Paper Series with number 69.

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    Length: 58 pages
    Date of creation: 2006
    Date of revision:
    Handle: RePEc:man:cgbcrp:69
    Contact details of provider: Postal: Manchester M13 9PL
    Phone: (0)161 275 4868
    Fax: (0)161 275 4812
    Web page: http://www.socialsciences.manchester.ac.uk/subjects/economics/our-research/centre-for-growth-and-business-cycle-research/

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    1. World Bank & International Monetary Fund, 2005. "Global Monitoring Report 2005 : Millennium Development Goals— From Consensus to Momentum," World Bank Publications, The World Bank, number 7325, October.
    2. Corrigan, Paul & Glomm, Gerhard & Mendez, Fabio, 2005. "AIDS crisis and growth," Journal of Development Economics, Elsevier, vol. 77(1), pages 107-124, June.
    3. Paul Glewwe, 1999. "Why Does Mother's Schooling Raise Child Health in Developing Countries? Evidence from Morocco," Journal of Human Resources, University of Wisconsin Press, vol. 34(1), pages 124-159.
    4. Pierre-Richard Agénor, 2008. "Fiscal policy and endogenous growth with public infrastructure," Oxford Economic Papers, Oxford University Press, vol. 60(1), pages 57-87, January.
    5. Sebastian Galiani & Martín González Rozada & Ernesto Schargrodsky, 2007. "Water Expansions in Shantytowns: Health and Savings," Research Department Publications 3234, Inter-American Development Bank, Research Department.
    6. repec:rie:review:v:10:y:2005:i:3:n:3 is not listed on IDEAS
    7. Paul Glewwe, 2002. "Schools and Skills in Developing Countries: Education Policies and Socioeconomic Outcomes," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 436-482, June.
    8. Klaus Deininger & Anja Crommelynck & Gloria Kempaka, 2005. "Impact of AIDS on Family Composition, Welfare, and Investment: Evidence from Uganda ," Review of Development Economics, Wiley Blackwell, vol. 9(3), pages 303-324, 08.
    9. Hung-ju Chen, 2003. "Educational Systems, Growth and Income Distribution: A Quantitative Study," Computing in Economics and Finance 2003 13, Society for Computational Economics.
    10. Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
    11. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    12. van Zon, Adriaan & Muysken, Joan, 2001. "Health and endogenous growth," Journal of Health Economics, Elsevier, vol. 20(2), pages 169-185, March.
    13. Turnovsky, Stephen J., 1996. "Optimal tax, debt, and expenditure policies in a growing economy," Journal of Public Economics, Elsevier, vol. 60(1), pages 21-44, April.
    14. Marianne Fay & Danny Leipziger & Quentin Wodon & Tito Yepes, 2003. "Achieving the Millennium Development Goals : The role of infrastructure," Policy Research Working Paper Series 3163, The World Bank.
    15. Smith, Lisa C. & Haddad, Lawrence James, 2000. "Explaining child malnutrition in developing countries: a cross-country analysis," Research reports 111, International Food Policy Research Institute (IFPRI).
    16. Chen, Been-Lon, 2006. "Public capital, endogenous growth, and endogenous fluctuations," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 768-774, December.
    17. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
    18. Piras Romano, 2005. "Growth, Congestion of Public Goods, and Second-Best Optimal Policy: A Dynamic Analysis," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 397-416.
    19. Edward Miguel & Michael Kremer, 2004. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities," Econometrica, Econometric Society, vol. 72(1), pages 159-217, 01.
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