Education, borrowing constraints and growth: A note

Michael Hatcher

Economics Letters, 2022, vol. 212, issue C

Abstract: Kitaura (2012) shows an inverse U-shape relationship between balanced growth and the tightness of educational borrowing constraints and argues that a loosening of constraints need not be Pareto-improving even if growth increases. We provide a careful analysis of the transition, showing that an unanticipated loosening of credit constraints is welfare-improving for initial generations, but may be detrimental to (some) subsequent generations when growth increases. Thus, we argue that governments concerned with re-election may support a loosening of credit at the expense of future generations.

Keywords: Education; Borrowing constraints; Economic growth; Welfare (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:212:y:2022:i:c:s0165176522000039

DOI: 10.1016/j.econlet.2022.110274

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