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Human Capital, Public Debt, and Economic Growth: A Political Economy Analysis

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Listed:
  • Tetsuo Ono

    () (Graduate School of Economics, Osaka University)

  • Yuki Uchida

    () (Faculty of Economics, Seikei University)

Abstract

This study considers the politics of public education policy in an overlapping- generations model with physical and human capital accumulation. In particular, this study examines how debt and tax financing differ in terms of growth and welfare across generations, as well as which fiscal stance voters support. The analysis shows that the growth rate in debt financing is lower than that in tax financing, and that debt financing creates a tradeoff between the present and future generations. The analysis also shows that debt financing attains slower economic growth than that realized by the choice of a social planner who cares about the welfare of all generations.

Suggested Citation

  • Tetsuo Ono & Yuki Uchida, 2016. "Human Capital, Public Debt, and Economic Growth: A Political Economy Analysis," Discussion Papers in Economics and Business 16-01-Rev.3, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Oct 2017.
  • Handle: RePEc:osk:wpaper:1601r3
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Economic growth; Human capital; Public debt; Political equilib- rium;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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