Showing papers on "Golden Rule (fiscal policy) published in 1989"

International factor mobility and production technology

Abstract: The present paper systematically investigates the pattern and effect of international factor mobility caused by international differences of production technology in an endogenous-population-growth and overlapping-generations model. We show here that if the autarkic steady state in each country is characterized by under-investment relative to the Golden Rule, international labour migration will take place to the country with a more capital-saving or a neutrally superior technology, and then the capital-labour ratio and the demand for children per family in that country will be lower. On the other hand, international capital will move to the country with a more labour-saving or a neutrally superior technology and will decrease the per worker domestic capital stock in that country.

Optimal investment in human capital under conditions of nonstable population.

Abstract: The paper analyses optimal investment in physical and human capital when the (exogenous) rate of population growth changes. The growth model describes a closed economy with overlapping generations and homogeneous human capital. The optimal growth path is characterized by two groups of optimality conditions: a Generalized Golden Rule for optimal investment in physical capital; and a continuum of Golden Rules of Education corresponding to the continuum of active generations. These conditions for optimal investment in human capital can be interpreted in terms of the familiar equality of discounted costs and returns. The model is illustrated with a numerical simulation. (EXCERPT)