TY  - JOUR
AU  - Buiter,Willem H.
AU  - Kletzer,Kenneth M.
TI  - Capital Mobility, Fiscal Policy and Growth under Self-Financing of      Human Capital Formation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5120
PY  - 1995
Y2  - May 1995
UR  - http://www.nber.org/papers/w5120
L1  - http://www.nber.org/papers/w5120.pdf
N1  - Author contact info:
Willem H. Buiter
Citigroup Centre
Canada Square, Canary Wharf
London E14 5LB
UNITED KINGDOM
E-Mail: willembuiter@btinternet.com

Kenneth Kletzer
University of California, Santa Cruz
Department of Economics
217 Social Sciences 1
Santa Cruz, CA  95064
Tel: 408-459-3407
E-Mail: kkletzer@cats.ucsc.edu
AB  - This paper considers the effects of fiscal and financial policy on economic growth in open and closed economies, when human capital formation by young households is constrained by the illiquidity of human wealth.  Both endogenous and exogenous growth versions of the basic OLG model are analyzed.  We find that intergenerational redistribution policies that discourage physical capital formation may encourage human capital formation.  Despite common technologies and perfect international mobility of financial capital, the non- tradedness of human capital and the illiquidity of human wealth make for persistent differences in productivity growth rates (in the endogenous growth version of the model) or in their levels (in the exogenous growth version).  We also consider the productivity growth (or level) effects of public spending on education and of the distortionary taxation of financial asset income.
ER  -