Appropriate Growth Policy: A Unifying Framework

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Appropriate Growth Policy: A Unifying Framework

Show simple item record Howitt, Peter Aghion, Philippe 2010-11-15T14:54:50Z 2006
dc.identifier.citation Aghion, Philippe, and Peter Howitt. 2006. Appropriate growth policy: A unifying framework. Journal of the European Economic Association 4(2-3): 269-314. en_US
dc.identifier.issn 1542-4774 en_US
dc.identifier.issn 1542-4766 en_US
dc.description.abstract In this lecture, we use Schumpeterian growth theory, where growth comes from quality-improving innovations, to elaborate a theory of growth policy and to explain the growth gap between Europe and the US. Our theoretical apparatus systematizes the case-by-case approach to growth policy design. The emphasis is on three policy areas that are potentially relevant for growth in Europe, namely: competition and entry, education, and macropolicy. We argue that higher entry and exit (higher firm turnover) and increased emphasis on higher education are more growth-enhancing in countries that are closer to the technological frontier. We also argue that countercyclical budgetary policies are more growth-enhancing in countries with lower financial development. The analysis thus points to important interaction effects between policies and state variables, such as distance to frontier or financial development, in growth regressions. Finally, we argue that the other endogenous growth models, namely the AK and product variety models, fail to account for the evidence on the relationship between competition, education, volatility, and growth, and consequently cannot deliver relevant policy prescriptions in the three areas we consider. en_US
dc.description.sponsorship Economics en_US
dc.language.iso en_US en_US
dc.publisher MIT Press en_US
dc.relation.isversionof doi:10.1162/jeea.2006.4.2-3.269 en_US
dash.license LAA
dc.title Appropriate Growth Policy: A Unifying Framework en_US
dc.type Journal Article en_US
dc.description.version Version of Record en_US
dc.relation.journal Journal of the European Economic Association en_US Aghion, Philippe 2010-11-15T14:54:50Z

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