Abstract
We examine a one-sector growth model in which public capital is an external input to private production functions. Revenues from taxing capital and labor income are used to fund public investments. The competitive equilibrium can be obtained by solving an artificial planning problem. We prove that there exists a unique competitive equilibrium which can be characterized by Euler equations and a transversality condition. We then establish the existence of an optimal public investment plan.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1207-1224 |
| Number of pages | 18 |
| Journal | Journal of Economic Dynamics and Control |
| Volume | 23 |
| Issue number | 8 |
| DOIs | |
| State | Published - Aug 1999 |
| Externally published | Yes |
Keywords
- Competitive equilibrium
- E1
- E6
- Growth
- H4.
- Infrastructure
- Optimal plan
- Public investment
ASJC Scopus subject areas
- Economics and Econometrics
- Control and Optimization
- Applied Mathematics