Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity

Mino, Kazuo

doi:10.1111/jere.12087

Cited by 6 publications

(3 citation statements)

References 49 publications

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“…3. This paper also shares with Mino (2015Mino ( , 2016 in addressing endogenous growth with productivity heterogeneity and financial frictions. Mino (2015Mino ( , 2016, however, discusses the question in the AK model with capital externality, whereas this paper focuses on the role of human capital formation.…”

Section: Discussionmentioning

confidence: 88%

Revisiting Uzawa–Lucas with public human capital spending and productivity heterogeneity

Nguyen

2022

SEF

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Purpose This paper aims to study the effects of public human capital spending on growth under the presence of financial frictions and productivity heterogeneity. In addition, this paper derives and discusses growth-maximizing policy. Design/methodology/approach This paper constructs a tractable human capital–based growth model. There a continuum of heterogeneous entrepreneurs who own private firms, accumulate personal wealth and face collateral borrowing constraints. The representative worker accumulates human capital by using his own efforts, the existing human capital stock and human capital–related public services. The government finances public spending by taxing capital income. This paper then focuses its analysis on the balanced growth path equilibrium of the economy model. Findings This paper finds that public human capital spending financed by capital income taxation yields strictly higher growth than when the spending is absent. In addition, it shows that the growth-maximizing capital income tax rate is higher when the idiosyncratic firm productivity distribution is more heavy tailed. Originality/value This paper embraces and then explores the effects of productivity heterogeneity and financial frictions into an otherwise conventional human capital–based endogenous growth model. This paper also differs from the conventional endogenous growth framework by incorporating the productive role of public services in the process of accumulating human capital. Therefore, it can address the effects of public spending on growth.

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Section: Discussionmentioning

confidence: 88%

Revisiting Uzawa–Lucas with public human capital spending and productivity heterogeneity

Nguyen

2022

SEF

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“…As an example, whereas unconventional monetary policy has not worked and has not caused in ation to rise under the zero-interest rate 1 and sticky in ation rate (Miyao & Okimoto, 2017), exchange rate, the oil price, and the wage index have had a signi cant correlation with the price index (Yoshikawa, et al, 2015). On the other hand, scal policy shock has had the positive effect of GDP and consumption (Mino, 2016;Morita, 2017) while Japanese government debt is not sustainable (Armstrong & Okimoto, 2016) and may cause a scal crisis because of the high public debt .…”

Section: Introductionmentioning

confidence: 99%

Questioning Abenomics and a Keynesian Approach to Japan’s Deflation Problem via Input-Output Analysis

Biyik¹

2021

Preprint

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Japan’s economy has had chronic deflation and high public debt problems so that it has been trying to handle its problems based on either the demand-side or the supply-side for more than two decades. This paper suggests that a perspective of Keynesian-inspired Japanese economic policy may positively impact a specific part of the economy such as demand-side solutions, as mentioned in Keynes’ theory. The Japanese economy is examined by applying the Input-Output (I/O) method in which the aggregated eleven-sector is arranged by using statistical data from the Ministry of Economy, Trade, and Industry (METI). Firstly, our analysis focuses mainly on the updated 2012 domestic I/O table in order to understand the Japanese economic structure by examining final demand elements and eleven sectors, associated with the Leontief method. Secondly, this paper then investigated comparing with Abenomics representing by a mix of the new Keynesian and neoliberal policies in order to comparatively analyzed between the current economic structure and the economic policy and lastly provided some discussions to figure out in perspective of how to solve some economic issues. Therefore, not only did this paper delineate three scenarios/keys through dominant final demand which account for the public consumption expenditures (PUCE) and the public gross fixed capital formation (PUGFC); the target of the growth rate -the automobile sector through PUGFC-, the employment rate -the commerce sector through PUCE-, and the import rate -the commerce sector through PUCE- based on the results of the data analyzed, but also comparatively examined Abenomics in order to provide some possible policy paths which highlight the demand-side remedies for the economic issues; structural reform in the fiscal sustainability, mainly wage increase (especially low and middle incomes), working practice (bringing back the mutual work environment), and fair tax system.

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“… See Mino () for the introduction of Marshall–Arrow–Romer externalities (e.g. Romer, ) into the individual production function in a growth model with heterogeneity and borrowing constraints.…”

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confidence: 99%

Growth Model with Financial Deepening and Productivity Heterogeneity

Nguyen

2018

Jpn Econ Rev

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This paper studies the effects of financial deepening on growth dynamics and productivity in an economy where heterogeneous entrepreneurs face endogenous borrowing constraints. Quantitative results from a calibrated model suggest that 38% of Japan's total factor productivity from 1961 to 1991 can be explained by the financial deepening effects and the convergence speed is 29% slower than that implied by neoclassical models. The present paper also theoretically shows that an economy with a higher degree of productivity heterogeneity is more likely to avoid the poverty trap and converge with a slower speed to its steady state.

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Fiscal Policy in a Growing Economy with Financial Frictions and Firm Heterogeneity

Cited by 6 publications

References 49 publications

Revisiting Uzawa–Lucas with public human capital spending and productivity heterogeneity

Revisiting Uzawa–Lucas with public human capital spending and productivity heterogeneity

Questioning Abenomics and a Keynesian Approach to Japan’s Deflation Problem via Input-Output Analysis

Growth Model with Financial Deepening and Productivity Heterogeneity

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