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Childcare Support and Public Capital in an Ultra-Declining Birthrate Society

Miyake, Yusuke (2021): Childcare Support and Public Capital in an Ultra-Declining Birthrate Society.

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This paper analyzes whether public capital investment oor childcare support maximize the growth rate in an ultra-declining birth rate society using a labor-augmented model with public capital. We clarify the global stability of the private capital-public capital ratio in the steady state. In addition, we analyze the effect of increasing the expenditure share of tax revenue on economic growth. The result of this analysis shows that an increased share of public capital investment brings higher economic growth. This means that if all tax revenue is allocated to public capital investment, the growth rate will be maximized. Furthermore, in the second case, the model is reconstructed in such a way that the child is regarded as a nominal consumer goods in the first period and the childcare cost is regarded as a price. In that case, the impact of increased public capital on growth is shown to be minor compared to the former case.

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