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Composition of Government Expenditure, Human Capital Accumulation, and Welfare
Author:
Mr. John J Matovu
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Series:
IMF Working Papers
Volume/Issue:
Volume 2000: Issue 015
Language:
English
Publication Date:
01 Jan 2000
DOI:
https://doi.org/10.5089/9781451843255.001
ISBN:
9781451843255
ISSN:
1018-5941
Pages:
26
Keywords:
WP; capital stock; physical capital; public expenditure; government expenditure; welfare; growth; tax financing; infrastructure expenditure; age-consumption profile; expenditure policy change; policy reform; aggregate consumption; government investment expenditure; financing expenditure; Human capital; Health care spending; Consumption taxes; Education spending; Africa; Sub-Saharan Africa
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund