Composition of Government Expenditure, Human Capital Accumulation, and Welfare

Author/Editor:

John J Matovu

Publication Date:

January 1, 2000

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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.

Series:

Working Paper No. 2000/015

Subject:

Consumption taxes Education spending Expenditure Health care spending Human capital Labor Taxes

English

Publication Date:

January 1, 2000

ISBN/ISSN:

9781451843255/1018-5941

Stock No:

WPIEA0152000

Pages:

26

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