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International Advances in Economic Research

, Volume 10, Issue 3, pp 202–214 | Cite as

Optimal fiscal policy in the Uzawa-Lucas model with CES production

  • Manuel A. Gómez
  • Antonio Sarmiento Escalona
  • J. Antonio Seijas
Articles
  • 64 Downloads

Abstract

This paper devises an endogenous growth model with human capital in the Uzawa-Lucas framework in which the average human capital has a positive external effect on the goods sector. Unlike previous works, this paper assumes that output is produced with a CES technology and analyzes the existence, uniqueness, and stability of equilibrium. Also, a fiscal policy is devised that is capable of providing the required incentives to optimize the competitive equilibrium. In order to correct the market failure caused by the externality, the authors introduce a subsidy to human capital and analyze how it can be financed in an optimal way. Some simulation results are presented.

Keywords

Economic Growth Human Capital Growth Model International Economic Fiscal Policy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© International Atlantic Economic Society 2004

Authors and Affiliations

  • Manuel A. Gómez
    • 1
  • Antonio Sarmiento Escalona
    • 1
  • J. Antonio Seijas
    • 1
  1. 1.University of A CoruñaSpain

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