STABILIZATION POLICY, LEARNING-BY-DOING, AND ECONOMIC GROWTH |
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Authors: | MARTIN, PHILIPPE ROGERS, CAROL ANN |
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Affiliation: | *The Graduate Institute of International Studies Geneva, CEPII, Paris, and CEPR, London Department of Economics, Georgetown University Washington, DC, USA |
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Abstract: | This paper shows that fiscal policy, when used for stabilizationpurposes, can have a positive effect on the economy's growth,on human capital accumulation, and on welfare. We introducestochastic productivity shocks into a model in which productivityis augmented through learning-by-doing If future benefits oflearning-by-doing are not fully internalized by workers, thenrecessions are periods in which opportunities for acquiringexperience are foregone. We identify configurations of disturbancesand other parameters for which a countercyclical policy maximizesgrowth and welfare. |
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