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Si us plau utilitzeu sempre aquest identificador per citar o enllaçar aquest document: https://hdl.handle.net/2445/11766
Deficit, human capital and economic growth dynamics
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Long-run economic growth arouses a great interest since it can shed light on the income-path of an economy and try to explain the large differences in income we observe across countries and over time. The neoclassical model has been followed by several endogenous growth models which, contrarily to the former, seem to predict that economies with similar preferences and technological level, do not necessarily tend to converge to similar per capita income levels. This paper attempts to show a possible mechanism
through which macroeconomic disequilibria and inefficiencies, represented by budget deficits, may hinder human capital accumulation and therefore economic growth. Using a mixed education system, deficit is characterized as a bug agent which may end up sharply reducing the resources devoted to education and training. The paper goes a step further from the literature on deficit by introducing a rich dynamic analysis of the effects of a deficit reduction on different economic aspects.
Following a simple growth model and allowing for slight changes in the law of human capital accumulation, we reach a point where deficit might sharply reduce human capital accumulation. On the other hand, a deficit reduction carried on for a long time, taking that reduction as a more efficient management of the economy, may prove useful in inducing endogenous growth. Empirical evidence for a sample of countries seems to support the theoretical assumptions in the model: (1) evidence on an inverse relationship between
deficit and human capital accumulation, (2) presence of a strongly negative association
between the quantity of deficit in the economy and the rate of growth. They may prove a certain role for budget deficit in economic growth
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RIERA I PRUNERA, Maria carme. Deficit, human capital and economic growth dynamics. _Documents de treball (Facultat d'Economia i Empresa. Espai de Recerca en Economia)_. 2003. Vol. E03/102. [consulta: 5 de desembre de 2025]. [Disponible a: https://hdl.handle.net/2445/11766]