Public expenditure, risk sharing and economic growth

Lifeng Zhang ()

Manchester School, 2024, vol. 92, issue 1, 67-89

Abstract: We develop an endogenous growth model with expanding variety in which asymmetric information frictions arise when R&D firms need access to external funding to finance their R&D investments and public expenditure affects the magnitude of hidden costs, in turn affecting the severity of asymmetric information frictions. We show that public expenditure affects growth by influencing risk sharing, thereby identifying a new channel, unlike the standard mechanism used in the literature that emphasizes the role of public expenditure in directly improving the productivity of the private sector.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/manc.12456

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:manchs:v:92:y:2024:i:1:p:67-89

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1463-6786

Access Statistics for this article

Manchester School is currently edited by Keith Blackburn

More articles in Manchester School from University of Manchester Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().