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

Asian Development Review

Chetan Ghate¹  Gerhard Glomm²  Jialu Liu Streeter³ 

[1] Chetan Ghate (corresponding author): Economics and Planning Unit, Indian Statistical Institute Delhi. E-mail: [e-mail];Gerhard Glomm: Department of Economics, Indiana University, Indiana. E-mail: [e-mail];Jialu Liu Streeter: Department of Economics, Allegheny College, Pennsylvania. E-mail: [e-mail].;

关键词: Indian economic growth;    misallocation;    public capital;    structural transformation;    two-sector OLG growth models;    unbalanced growth;   

DOI  :  10.1162/ADEV_a_00076

来源: DOAJ

【 摘 要 】

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.

【 授权许可】

Unknown