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Human Capital, Growth, and Asset Prices

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  • Fabian Goessling

Abstract

Human capital investment is one of the most important drivers of growth. In this paper, I enhance the endogenous growth model of Kung and Schmid (2015) by an educational choice decision of the household. The engine of growth in the extended model is a composite of firm-side R&D capital stock and a household-side human capital stock. As households are able to allocate their time to labor, leisure and educational activities, the model allows to simultaneously study labor and education choices. The parameters of the non-linear model can be estimated by advanced Bayesian methods, allowing to study the return on human capital conditional on the data.

Suggested Citation

  • Fabian Goessling, 2018. "Human Capital, Growth, and Asset Prices," CQE Working Papers 6918, Center for Quantitative Economics (CQE), University of Muenster.
    • Handle: RePEc:cqe:wpaper:6918
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    File URL: https://www.wiwi.uni-muenster.de/cqe/sites/cqe/files/CQE_Paper/cqe_wp_69_2018.pdf
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    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Massimiliano Croce, Mariano, 2014. "Long-run productivity risk: A new hope for production-based asset pricing?," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 13-31.
    3. King, Ian & Sweetman, Arthur, 2002. "Procyclical Skill Retooling and Equilibrium," Working Papers 162, Department of Economics, The University of Auckland.
    4. Fabian Goessling, 2018. "Randomized Quasi Sequential Markov Chain Monte Carlo²," CQE Working Papers 7018, Center for Quantitative Economics (CQE), University of Muenster.
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    6. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    7. repec:bla:jfinan:v:59:y:2004:i:4:p:1481-1509 is not listed on IDEAS
    8. David N. DeJong & Beth F. Ingram, 2001. "The Cyclical Behavior of Skill Acquisition," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(3), pages 536-561, July.
    9. Jing Dang & Max Gillman & Michal Kejak, 2011. "Real Business Cycles with a Human Capital Investment Sector and Endogenous Growth: Persistence, Volatility and Labor Puzzles," CERS-IE WORKING PAPERS 1128, Institute of Economics, Centre for Economic and Regional Studies.
    10. Dario Caldara & Jesus Fernandez-Villaverde & Juan Rubio-Ramirez & Wen Yao, 2012. "Computing DSGE Models with Recursive Preferences and Stochastic Volatility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 188-206, April.
    11. Nancy L Stokey, 2014. "The Race Between Technology and Human Capital," 2014 Meeting Papers 1113, Society for Economic Dynamics.
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    14. Jim Malley & Ulrich Woitek, 2011. "Productivity Shocks and Aggregate Fluctuations in an Estimated Endogenous Growth Model with Human Capital," CESifo Working Paper Series 3567, CESifo.
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    Cited by:

    1. Argentiero, Amedeo & Cerqueti, Roy & Sabatini, Fabio, 2021. "Does social capital explain the Solow residual? A DSGE approach," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 35-53.

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    More about this item

    Keywords

    Asset Pricing; Endogenous Growth; Human Capital; Bayesian Estimation;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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