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Intergenerational Complementarities in Education and the Relationship between Growth and Volatility

Theodore Palivos and Dimitrios Varvarigos ()
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Dimitrios Varvarigos: Department of Economics, University of Leicester, http://www.le.ac.uk/ec/

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: We construct an overlapping generations model in which parents vote on the tax rate that determines publicly provided education and offspring choose their effort in learning activities. The technology governing the accumulation of human capital allows these decisions to be strategic complements. In the presence of coordination failure, indeterminacy and, possibly, growth cycles emerge. In the absence of coordination failure, the economy moves along a uniquely determined balanced growth path. We argue that such structural differences can account for the negative correlation between volatility and growth.

Keywords: Human Capital; Economic Growth; Volatility. (search for similar items in EconPapers)
JEL-codes: O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-edu, nep-fdg and nep-hrm
Date: 2009-03, Revised 2009-03
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