IDEAS home Printed from https://ideas.repec.org/a/oup/oxecpp/v71y2019i3p577-599..html
   My bibliography  Save this article

Poverty, prosperity, and fiscal policies in a two-sector model with human capital externalities

Author

Listed:
  • Lei Shao
  • Jie Zhang

Abstract

This paper investigates the multiplicity and indeterminacy of balanced growth paths (BGPs) to capture coexisting poverty traps and prosperity across countries in an extended Lucas model incorporating physical inputs, human capital externalities, and decreasing returns to scale in education. We show that two BGPs can emerge, where the high-growth BGP devotes more resources to education than the low-growth BGP. Without taxes or subsidies, the two BGPs never display poverty traps. With taxes and subsidies, however, the two BGPs may display prosperity on one BGP and poverty traps on the other BGP that could be avoidable by suitable fiscal policies.

Suggested Citation

  • Lei Shao & Jie Zhang, 2019. "Poverty, prosperity, and fiscal policies in a two-sector model with human capital externalities," Oxford Economic Papers, Oxford University Press, vol. 71(3), pages 577-599.
    • Handle: RePEc:oup:oxecpp:v:71:y:2019:i:3:p:577-599.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/oep/gpy049
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zeng, Jinli & Zhang, Jie, 2022. "Education policies and development with threshold human capital externalities," Economic Modelling, Elsevier, vol. 108(C).

    More about this item

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:oxecpp:v:71:y:2019:i:3:p:577-599.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/oep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.