Sectoral Infrastructure Investments in an Unbalanced Growing Economy: The Case of Potential Growth in India

Autor:	Chetan Ghate, Gerhard Glomm, Jialu Liu Streeter
Jazyk:	angličtina
Rok vydání:	2016
Předmět:	Indian economic growth misallocation public capital structural transformation two-sector OLG growth models unbalanced growth Social sciences and state - Asia (Asian studies only) H53
Zdroj:	Asian Development Review, Vol 33, Iss 2, Pp 144-166 (2016)
Druh dokumentu:	article
ISSN:	0116-1105 1996-7241
DOI:	10.1162/ADEV_a_00076
Popis:	We construct a two-sector (agriculture and modern) overlapping generations growth model calibrated to India to study the effects of sectoral tax rates, sectoral infrastructure investments, and labor market frictions on potential growth in India. Our model is motivated by the idea that because misallocation depends on distortions, policies that reduce distortions raise potential growth. We show that the positive effect of a variety of policy reforms on potential growth depends on the extent to which public and private capital are complements or substitutes. We also show that funding more infrastructure investments in both sectors by raising labor income taxes in the agriculture sector raises potential growth.
Databáze:	Directory of Open Access Journals
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