Publicação
Social Infrastructure and the Preservation of Physical Capital: Equilibria and Transitional Dynamics
| Resumo: | We study the mechanisms according to which social infrastructure influences the preser- vation of physical capital and, consequently, economic growth. The model considers that social infrastructure is a specific type of human capital, which acts in order to preserve already existing physical capital, by, e.g., reducing the incentive for rent seeking or cor- ruption. Using an innovative methodology in economics, the Gröbner bases, we study the equilibrium of our model and conclude for the existence of two feasible steady-states or of unicity according to different combinations of parameters, highlighting a trade-off between consumption and production on one hand and social infrastructure and physical capital accumulation, on the other. We also present sufficient conditions for saddle-path stabil- ity. Finally, we describe transitional dynamics and calculate welfare effects from which we show that strengthening social infrastructure increases welfare. |
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| Autores principais: | Soares, Helena |
| Outros Autores: | Neves Sequeira, Tiago; Macias Marques, Pedro; Gomes, Orlando; Ferreira-Lopes, Alexandra |
| Assunto: | Social infrastructure Physical capital depreciation Endogenous growth Multiple equilibria Gröbner bases |
| Ano: | 2018 |
| País: | Portugal |
| Tipo de documento: | artigo |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade de Évora |
| Idioma: | inglês |
| Origem: | Repositório Científico da Universidade de Évora |
| Resumo: | We study the mechanisms according to which social infrastructure influences the preser- vation of physical capital and, consequently, economic growth. The model considers that social infrastructure is a specific type of human capital, which acts in order to preserve already existing physical capital, by, e.g., reducing the incentive for rent seeking or cor- ruption. Using an innovative methodology in economics, the Gröbner bases, we study the equilibrium of our model and conclude for the existence of two feasible steady-states or of unicity according to different combinations of parameters, highlighting a trade-off between consumption and production on one hand and social infrastructure and physical capital accumulation, on the other. We also present sufficient conditions for saddle-path stabil- ity. Finally, we describe transitional dynamics and calculate welfare effects from which we show that strengthening social infrastructure increases welfare. |
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