nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒11‒22
four papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. The dilemma of international capital tax competition in the presence of public capital and endogenous growth By Stauvermann, Peter J.; Kumar, Ronald R.
  2. "Technological Change and Population" By Wesson, Joseph
  3. Enhancing Growth and Welfare through debt-financed Education By Stauvermann, Peter Josef; Kumar, Ronald
  4. Trade, Sectorial Reallocation, and Growth By Wang, Pengfei; Xie, Danyang

  1. By: Stauvermann, Peter J.; Kumar, Ronald R.
    Abstract: Using an OLG-model with endogenous growth and public capital we show, that an international capital tax competition leads to inefficiently low tax rates, and as a consequence to lower welfare levels and growth rates. Each national government has an incentive to reduce the capital income tax rates in its effort to ensure that this policy measure increases the domestic private capital stock, domestic income and domestic economic growth. This effort is justified as long as only one country applies this policy. However, if all countries follow this path then all countries will be made worse off in the long run.
    Keywords: capital tax competition, OLG model, endogenous growth, public capital
    JEL: H21 H54 O41
    Date: 2014–09
  2. By: Wesson, Joseph
    Abstract: The following paper is a short note on the relationship between technological change and population size.
    Keywords: technology growth population
    JEL: O4 O47
    Date: 2014–10–06
  3. By: Stauvermann, Peter Josef; Kumar, Ronald
    Abstract: Using an over-lapping generations (OLG) model, we show how small open economies can enhance their growth through educational subsidies financed via public debt and reduce their fertility rate. We show that subsidizing education through public debt leads to a Pareto improvement of all generations. Even if a country is a net borrower in the international capital market, we show that this subsidy-policy can help, under certain conditions, to improve its net borrowing position. Especially, our analysis can be applied to less-developed countries.
    Keywords: fertility; human capital; education subsidy; government debt.
    JEL: H24 O1 O15 O41
    Date: 2014–06
  4. By: Wang, Pengfei; Xie, Danyang
    Abstract: This paper introduces sectorial heterogeneity in TFPs in a growth model to generate new insights on trade, sectorial reallocation, and economic growth. The rate of overall economic growth in this model is a simple average of sectorial growth in a closed economy, but will depend on trade parameters in an open economy as openness to trade shifts resources toward fast-growing sectors. We find that the overall growth rate is unambiguously higher as the number of trading partners increases. These conclusions survive even after trade cost is introduced. Nevertheless, trade share and growth rate may not move in the same direction as trade liberalization is pursued or as the number of trading partners increases. This finding may explain why the existing empirical evidence concerning this relationship between growth and trade share remains inconclusive.
    Keywords: Heterogeneous Sectors, International Trade, Growth
    JEL: F12 R13
    Date: 2014–09

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