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Market Failures and Government Failures in the Model of Transition from Stagnation to Growth

Author

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  • Veselov, D.

    (National Research University - Higher School of Economics, Moscow, Russia)

Abstract

The paper provides a framework for analysis of optimal growth enhancing policy in the economy with market and government failures. It develops an endogenous growth model with strategic complementarities between R&D investments of firms and investments in training of households. The model generates two possible long-run equilibriums: no-growth poverty trap equilibrium and stable sustainable growth equilibrium. In the extended version of the model with government failures we assume that some part of government revenue is expropriated by rent seeking agents. With these conditions we analyze the possibility of transition from stagnation to growth induced by government investment subsidies and other factors.

Suggested Citation

  • Veselov, D., 2011. "Market Failures and Government Failures in the Model of Transition from Stagnation to Growth," Journal of the New Economic Association, New Economic Association, issue 12, pages 24-39.
    • Handle: RePEc:nea:journl:y:2011:i:12:p:24-39
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    Cited by:

    1. Balatsky, Ye., 2012. "Technological Diffusion and Investment Decision," Journal of the New Economic Association, New Economic Association, vol. 15(3), pages 10-34.
    2. Golub, A. & Potashnikov, V., 2022. "Theoretical analysis of development traps: On the example of Russia," Journal of the New Economic Association, New Economic Association, vol. 54(2), pages 56-74.

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    More about this item

    Keywords

    poverty trap; endogenous growth theory; human capital; rent seeking;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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