Multiple equilibria, fiscal policy, and human capital accumulation

Jaime Alonso-Carrera () and María Jesús Freire-Seren

No 204, Working Papers from Universidade de Vigo, Departamento de Economía Aplicada

Abstract: This paper shows that in a three-sector model of endogenous growth with physical and human capital accumulation, taxation policy can generate indeterminacy under plausible parameterizations. The key for this result is that the accumulation of human capital is a non-market activity in which individuals combine their non-working time with intermediate goods that are provided by the market. This assumption is consistent with the microfoundations of human capital accumulation found by the literature on life-cycle earnings.

Keywords: indeterminacy; human capital investment; economic growth; fiscal policy. (search for similar items in EconPapers)
JEL-codes: E32 E62 O41 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2002-07
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Journal Article: Multiple equilibria, fiscal policy, and human capital accumulation (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:vig:wpaper:0204

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