Buiter, Willem H. and Kletzer, K. (1995) Capital mobility. CEPDP, 245. Centre for Economic Performance, London School of Economics and Political Science, London, UK.Full text not available from this repository.
This paper considers the effect of fiscal and financial policy on economic growth in open and closed economies, when human capital formation by young households is constrained by the illiquidity of human wealth. Both endogenous and exogenous growth versions of the basic OLG model are analyzed. We find that intergenerational redistribution policies that discourage physical and capital formation may encourage human capital formation. Despite common technologies and perfect international mobility financial capital, the non-tradedness of human capital and the illiquidity of human wealth makes for persistent differences in productivity growth rates (in the endogenous growth version of the model) or in their levels (in the exogenous growth version). We also consider the productivity growth (or level) effects of public spending on education and of the distortionary taxation of financial asset income.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 1995 the authors|
|Library of Congress subject classification:||H Social Sciences > HG Finance|
|Sets:||Departments > European Institute
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