FISCAL-POLICY IN A MODEL OF ENDOGENOUS GROWTH WITH LEARNING BY DOING

The goal of this article is to analyze the effects of fiscal policy on the steady state growth rate of an endogenous growth model, in which sustained per capita growth results from spillovers of investment in p hysical capital. In contrast to conventional models, however it is ass umed that investment at different dates has different weights concerni ng its contribution to the stock of human capital. With this assumptio n it can be shown that the competitive economy may be characterized by a situation in which a decrease in the income tar rate or an increase in an investment subsidy always raises the growth rate, or by a situa tion with an optimal level for the income tar rate and investment subs idy, concerning maximum growth. Moreover; a nondistortionary consumpti on tar does not influence balanced growth.