dc.contributor.author |
Getachew, Yoseph
|
|
dc.contributor.author |
Turnovsky, Stephen J.
|
|
dc.date.accessioned |
2016-04-21T06:59:23Z |
|
dc.date.issued |
2015-05 |
|
dc.description.abstract |
This paper investigates the effects of productive government spending on the relationship between
growth and inequality in an economy subject to idiosyncratic production shocks and heterogeneous
endowments. Assuming lognormal distributions, we derive tractable closed form solutions describing
the equilibrium dynamics. We show how the effect of government investment on the equilibrium
dynamics of both inequality and growth depends crucially upon the elasticity of substitution between
public and private capital in production. This has important consequences for the growth- and welfaremaximizing
rates of government investment. Finally, we supplement our theoretical analysis with
numerical simulations, calibrated to approximate the productive characteristics of a real world economy.
With the empirical evidence strongly supporting the complementarity between public and private capital,
our simulations suggest that conclusions based on the commonly employed Cobb-Douglas production
function may be seriously misleading. |
en_ZA |
dc.description.department |
Economics |
en_ZA |
dc.description.embargo |
2016-05-31 |
|
dc.description.librarian |
hb2016 |
en_ZA |
dc.description.uri |
http://www.elsevier.com/locate/rie |
en_ZA |
dc.identifier.citation |
Getachew, Y & Turnovsky, SJ 2015, 'Productive government spending and its consequences for the growth-inequality tradeoff', Research in Economics, vol. 69, pp. 621-640. |
en_ZA |
dc.identifier.issn |
1090-9443 (print) |
|
dc.identifier.issn |
1090-9451 (online) |
|
dc.identifier.other |
10.1016/j.rie.2015.09.001 |
|
dc.identifier.uri |
http://hdl.handle.net/2263/52089 |
|
dc.language.iso |
en |
en_ZA |
dc.publisher |
Elsevier |
en_ZA |
dc.rights |
© 2015 University of Venice Published by Elsevier Ltd. All rights reserved. Notice : this is the author’s version of a work that was accepted for publication in Research in Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. A definitive version was subsequently published in Research in Economics, vol. 69, pp. 621-640, 2015. doi : 10.1016/j.rie.2015.09.001. |
en_ZA |
dc.subject |
Government investment |
en_ZA |
dc.subject |
Idiosyncratic shocks |
en_ZA |
dc.subject |
Growth |
en_ZA |
dc.subject |
Inequality |
en_ZA |
dc.title |
Productive government spending and its consequences for the growth-inequality tradeoff |
en_ZA |
dc.type |
Postprint Article |
en_ZA |