Schooling and Public Capital in a Model of Endogenous Growth

Pierre-Richard Agénor ()

Centre for Growth and Business Cycle Research Discussion Paper Series from Economics, The Univeristy of Manchester

Abstract: This paper studies the allocation of public spending between education services and infrastructure investment in an endogenous growth model where public capital in infrastructure affects the process of human capital accumulation. The balanced growth path is derived and the dynamics associated with a budget-neutral reallocation of spending from education to infrastructure are studied through numerical simulations. The growth-maximizing tax rate is shown to depend only on the production technology (as in standard flow models of public expenditure), whereas the optimal share of infrastructure investment depends also on the "productiveness" of infrastructure (relative to education services) in the schooling technology.

New Economics Papers: this item is included in nep-dev, nep-dge, nep-edu and nep-hrm
Date: 2005
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Working Paper: Schooling and Public Capital in a Model of Endogenous Growth (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:man:cgbcrp:61

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