Growth and Stagnation of Economies with Public Goods - A Neoclassical Analysis

Andersson, A.E. (1979). Growth and Stagnation of Economies with Public Goods - A Neoclassical Analysis. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-79-012

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Abstract

The work in the Regional Development Task is oriented to problems of long-term development of regions and systems of regions. The understanding of long-term regional development problems is closely related to an understanding of the interdependency of factors determining economic growth.

This paper is devoted to growth economics and its application to regional development. Much of my work on growth problems has been oriented to the use of dynamic input-output theory and its application to transportation networks with regions as the nodes of the network. The public goods issues have not been addressed in those studies, because of the fundamental theoretical problems associated with the inclusion of public goods in the input-output framework. This paper presents a first tentative approach to an inclusion of public goods in a growth framework with many regions. A neoclassical economic paradigm is chosen as the starting point and it is shown that an interregional model with public goods possesses equilibrium properties and also relative stability under certain conditions. It is the intention to use the theoretical framework presented in this paper as a starting point for an analysis of technological research and development as an endogenous public good in a regional growth process.

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