Social Capital, Government Expenditures and Growth /
Ponzetto, Giacomo A.M.
Social Capital, Government Expenditures and Growth / Giacomo A.M. Ponzetto, Ugo Troiano. - Cambridge, Mass. National Bureau of Economic Research 2018. - 1 online resource: illustrations (black and white); - NBER working paper series no. w24533 . - Working Paper Series (National Bureau of Economic Research) no. w24533. .
April 2018.
This paper shows that social capital increases economic growth by raising government investment in human capital. We present a model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, we find it alleviates myopic political incentives to underinvest in human capital, and it helps the selection of politicians that ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility. We provide evidence consistent with the predictions of our model. Individuals with higher social capital are more informed about their government. Countries with higher social capital spend a higher share of output on public education.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Social Capital, Government Expenditures and Growth / Giacomo A.M. Ponzetto, Ugo Troiano. - Cambridge, Mass. National Bureau of Economic Research 2018. - 1 online resource: illustrations (black and white); - NBER working paper series no. w24533 . - Working Paper Series (National Bureau of Economic Research) no. w24533. .
April 2018.
This paper shows that social capital increases economic growth by raising government investment in human capital. We present a model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, we find it alleviates myopic political incentives to underinvest in human capital, and it helps the selection of politicians that ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility. We provide evidence consistent with the predictions of our model. Individuals with higher social capital are more informed about their government. Countries with higher social capital spend a higher share of output on public education.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.