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

  • Alex Mourmouras International Monetary Fund
  • José A. Tijerina Universidad Autónoma de Nuevo León
Keywords: private production, Diamond growth model, Ramsey equilibrium

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.

References

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Published
01-01-1997
How to Cite
MourmourasA., & TijerinaJ. (1997). Goverment investments in schooling and infrastucture: Ramsey vs. Public choice paths in a lifecycle growth model. Estudios Económicos, 12(1), 3-21. https://doi.org/10.24201/ee.v12i1.252
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