STABILIZATION POLICY, LEARNING-BY-DOING, AND ECONOMIC GROWTH

This paper shows that fiscal policy, when used for stabilization purposes, can have a positive effect on the economy's growth, on human capital accumulation, and on welfare. We introduce stochastic productivity shocks into a model in which productivity is augmented through learning-by-doing If...

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Veröffentlicht in:Oxford economic papers 1997-04, Vol.49 (2), p.152-166
Hauptverfasser: MARTIN, PHILIPPE, ROGERS, CAROL ANN
Format: Artikel
Sprache:eng
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Zusammenfassung:This paper shows that fiscal policy, when used for stabilization purposes, can have a positive effect on the economy's growth, on human capital accumulation, and on welfare. We introduce stochastic productivity shocks into a model in which productivity is augmented through learning-by-doing If future benefits of learning-by-doing are not fully internalized by workers, then recessions are periods in which opportunities for acquiring experience are foregone. We identify configurations of disturbances and other parameters for which a countercyclical policy maximizes growth and welfare.
ISSN:0030-7653
1464-3812
DOI:10.1093/oxfordjournals.oep.a028601