Productive Public Spending, Knowledge Spillovers and Convergence: A Multi-Country Analysis

Antonio Pietro Federico and Carmelo Pierpaolo Parello

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops a multi-country AK model of endogenous growth with international knowledge transmission to analyze the impact of productive public expenditure on growth and convergence. A leader economy drives knowledge advancement, while follower countries benefit from spillovers if their knowledge exceeds a threshold. The findings suggest that public expenditure helps laggard followers acquire foreign technology but does not enhance long-term growth. Empirical analysis using a dynamic panel model confirms the threshold effect: public investment boosts growth only in countries far from the technological frontier, while it is ineffective for those at or beyond the threshold.

Keywords: AK growth; Knowledge spillovers; Development thresholds; Dynamic heterogeneous panels; Cross-Sectional dependence. (search for similar items in EconPapers)
JEL-codes: O10 O33 O47 (search for similar items in EconPapers)
Date: 2025-02-21
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