Optimal Stabilization Policy in the Presence of Learning by Doing

Philippe Martin and Carol Ann Rogers

Journal of Public Economic Theory, 2000, vol. 2, issue 2, 213-241

Abstract: This paper analyses the optimal stabilization policy when growth is driven by learning by doing. If benefits of learning by doing are not fully internalized, the optimal policy is to tax labor during expansions and to subsidize it during recessions. The long‐term impact of this policy depends critically on initial conditions: If stabilization starts during an expansion, it has a positive effect on long‐term production. When stabilization starts during a recession, its long‐term effect is negative. The paper makes a methodological contribution in its analytical derivation of the optimal policy along the transition path as well as in the steady state.

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.1111/1097-3923.00037

Related works:
Working Paper: Optimal Stabilization Policy in the Presence of Learning by Doing (2000)
Working Paper: Optimal Stabilization Policy in the Presence of Learning by Doing (1995)
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:jpbect:v:2:y:2000:i:2:p:213-241

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().