Abstract
An endogenous growth model has been developed that extends Sidrauski (1967), Roubini and Sala-i-Martin (1992,1995) and Lucas (1988) by combining financial development, human capital investment, and external openness. Financial development and trade liberalization are shown to increase the economic growth rate by increasing the marginal benefits of human capital investment. Expansionary governments are, however, provided with an incentive to increase the money supply growth rate, to repress the financial sector, to close its economy, and to impose a high proportional income tax rate.
| Original language | English |
|---|---|
| Pages (from-to) | 427-443 |
| Number of pages | 17 |
| Journal | Journal of International Trade and Economic Development |
| Volume | 9 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 2000 Dec |
| Externally published | Yes |
Keywords
- Endogenous growth
- Financial repression
- Human capital
- Openness
ASJC Scopus subject areas
- Geography, Planning and Development
- Development
- General Economics,Econometrics and Finance
