This paper examines the macroeconomic effectiveness of increasing public investment in physical and/or human capital. Recognizing concerns about the effects of a slowdown in productivity on the standard of living and wages, we consider the effectiveness of fiscal policy on growth and the labor share of national income. The analysis treats fiscal policy as a mix of spending on physical and human capital with appropriate taxation on wages and dividends.
The model is estimated with US annual data spanning several fiscal regimes and business cycles. The empirical results provide insights into historical effects and the estimated model is used to determine various combinations of Ramsey spending and taxation rules, including the management of debt stabilization through sequestration.In a counterfactual policy experiment, namely increasing public investment in physical capital to the same level as the public share of investment in human capital accumulation, financed by increasing the dividend tax rate to the same level as the wage tax rate, resulted in higher welfare, growth, and labor share.
Paul McNelis教授毕业于美国约翰霍普金斯大学，目前为美国福德汉姆大学加百列商学院金融学讲席教授（荣休）。他的研究领域为计算宏观经济学与国际金融。他在Journal of Monetary Economics, Review of Economics and Statistics, Journal of Applied Econometrics, Journal of Economic Dynamics and Control, Journal of International Money and Finance, Journal of Financial Stability等期刊发表论文多篇，并在多个国家和地区的中央银行担任研究员。