Composition of Government Expenditure, Human Capital Accumulation, and Welfare
January 1, 2000
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Summary
This paper uses a dynamic general equilibrium model calibrated to Ugandan data to examine the welfare effects of alternative scenarios of government expenditure and tax financing. Two expenditure types are considered: social spending that affects human capital, and infrastructure expenditures that affect productivity. The paper finds that social expenditures lead to higher economic growth depending on the form of financing; young generations benefit most from social spending financed by consumption taxes; agents do not substitute between human and physical capital as a result of changes in expenditure composition; and improving the productivity of fiscal expenditure is both growth and welfare enhancing.
Subject: Consumption taxes, Education spending, Expenditure, Health care spending, Human capital, Labor, Taxes
Keywords: Africa, age-consumption profile, aggregate consumption, capital stock, Consumption taxes, Education spending, expenditure policy change, financing expenditure, government expenditure, government investment expenditure, growth, Health care spending, Human capital, infrastructure expenditure, physical capital, policy reform, public expenditure, Sub-Saharan Africa, tax financing, welfare, WP
Pages:
26
Volume:
2000
DOI:
Issue:
015
Series:
Working Paper No. 2000/015
Stock No:
WPIEA0152000
ISBN:
9781451843255
ISSN:
1018-5941
