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Publicly Financed Education in an Endogenous Growth Model

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Abstract

This paper constructs an endogenous growth model, applicable largely to developing countries, based on human capital accumulation in which education is publicly provided and financed, and schooling is compulsory. Public investment in human and physical capital are financed from taxes on wage and capital income, and consumption. The equilibrium growth properties of the model are examined and the steady-state effects of education and fiscal policy are derived. The specification of the human capital production function and the strength of labour supply effects are shown to be important for the magnitude of steady-state outcomes. Simulations illustrate the model's properties.

Suggested Citation

  • John Creedy & Norman Gemmell, 2002. "Publicly Financed Education in an Endogenous Growth Model," Treasury Working Paper Series 02/24, New Zealand Treasury.
  • Handle: RePEc:nzt:nztwps:02/24
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    File URL: https://treasury.govt.nz/sites/default/files/2007-10/twp02-24.pdf
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    19. Mendoza, Enrique G. & Milesi-Ferretti, Gian Maria & Asea, Patrick, 1997. "On the ineffectiveness of tax policy in altering long-run growth: Harberger's superneutrality conjecture," Journal of Public Economics, Elsevier, vol. 66(1), pages 99-126, October.
    20. Michael Bleaney & Norman Gemmell & Richard Kneller, 2001. "Testing the endogenous growth model: public expenditure, taxation, and growth over the long run," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(1), pages 36-57, February.
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    Cited by:

    1. Pierre-Richard Agénor, 2012. "Infrastructure, Public Education And Growth With Congestion Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 64(4), pages 449-469, October.
    2. Cosmin Enache, 2009. "Fiscal Policy And Economic Growth In Romania," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-50.

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    More about this item

    Keywords

    Education; Taxation; Endogenous Growth; Labour Supply; General Equilibrium;
    All these keywords.

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

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