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Productive Public Spending, Knowledge Spillovers and Convergence: A Multi-Country Analysis

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  • Federico, Antonio Pietro
  • Parello, Carmelo Pierpaolo

Abstract

This paper develops a multi-country AK model of endogenous growth with international knowledge transmission to analyze the impact of productive public expenditure on growth and convergence. A leader economy drives knowledge advancement, while follower countries benefit from spillovers if their knowledge exceeds a threshold. The findings suggest that public expenditure helps laggard followers acquire foreign technology but does not enhance long-term growth. Empirical analysis using a dynamic panel model confirms the threshold effect: public investment boosts growth only in countries far from the technological frontier, while it is ineffective for those at or beyond the threshold.

Suggested Citation

  • Federico, Antonio Pietro & Parello, Carmelo Pierpaolo, 2025. "Productive Public Spending, Knowledge Spillovers and Convergence: A Multi-Country Analysis," MPRA Paper 123748, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:123748
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    More about this item

    Keywords

    AK growth; Knowledge spillovers; Development thresholds; Dynamic heterogeneous panels ; Cross-Sectional dependence.;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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