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

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  • Alex Mourmouras

    (International Monetary Fund)

  • José A. Tijerina

    (Universidad Autónoma de Nuevo León)

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.

Suggested Citation

  • Alex Mourmouras & José A. Tijerina, 1997. "Goverment investments in schooling and infrastucture: Ramsey vs. public choice paths in a lifecycle growth model," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 12(1), pages 3-21.
    • Handle: RePEc:emx:esteco:v:12:y:1997:i:1:p:3-21
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    References listed on IDEAS

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    5. John S. Akin & Irwin Garfinkel, 1977. "School Expenditures and the Economic Returns to Schooling," Journal of Human Resources, University of Wisconsin Press, vol. 12(4), pages 460-481.
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