Goverment investments in schooling and infrastucture: Ramsey vs. public choice paths in a lifecycle growth model

Alex Mourmouras and José A. Tijerina
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Alex Mourmouras: International Monetary Fund
José A. Tijerina: Universidad Autónoma de Nuevo León

Estudios Económicos, 1997, vol. 12, issue 1, 3-21

Abstract: Government financing of schooling is necessitated by capital market imperfections. Governments are also responsible for maintaining a stock of public capital that enters private production function. In this paper the welfare implications and politics of these investments are examined in a version of Diamond (1965) growth model. It is argued that in decentralized environments where the working generation is decisive each period significant underinvestment in both schooling and infrastructure will be observed relative to the Ramsey equilibrium.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:emx:esteco:v:12:y:1997:i:1:p:3-21

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