Quantifying Optimal Policy in an Endogenous Growth Model: A Theoretical Analysis

Ahmed Bellakhdhar

Quantifying Optimal Policy in an Endogenous Growth Model: A Theoretical Analysis

Ahmed Bellakhdhar * §

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§ University of Tunis, Tunisia

Quantifying Optimal Policy in an Endogenous Growth Model: A Theoretical Analysis

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Abstract

This paper aims to characterize the optimal growth path of an endogenous growth model with domestic innovation, human capital and external technology spillovers through import of technologically advanced products and foreign direct investments. There are three sources of inefficiency in the model; monopolistic competition in the intermediate-goods sector, duplication externalities and spillovers in R&D. This raises the question of whether an adequate government intervention can provide the required incentives to correct these inefficiencies and make the decentralized economy to replicate the first-best solution attainable by a social planner. In this study, we find that the first-best optimum can be decentralized by means of a tax on capital income at a constant rate combined with equality between the share of public spending in the total expenditure on education net of subsidy and the tax on labor income and a time-varying subsidy to R&D. Unlike previous works that focus solely on the steady state, we take explicitly into account the transitional dynamics as well.

References

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Ahmed Bellakhdhar. 2019. "Quantifying Optimal Policy in an Endogenous Growth Model: A Theoretical Analysis". Global Journal of Management and Business Research, Global Journal of Management and Business Research - F: Real estate, Event, Tourism Management & Transporting GJMBR-F Volume 19 (GJMBR Volume 19 Issue F2).

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GJMBR Volume 19 Issue F2

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

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Classification

GJMBR-F Classification JEL Code: D42

Submission ReceivedDecember 8, 2018
Peer Review Double Blind
Handling Editor
Accepted January 4, 2019
Published January 15, 2019

Version of record

v1.2

Issue date

September 12, 2019

Language

English

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Article Matrices

Total Score: 148

Country: Tunisia

Subject: Global Journal of Management and Business Research

Authors: Ahmed Bellakhdhar (PhD/Dr. count: 0)

View Count (all-time): 287

Total Views (Real + Logic): 653

Total Downloads (simulated): 50

Publish Date: 2019 01, Tue

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Total Views: 653

Total Downloads: 50

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