Productive Public Spending, Knowledge Spillovers and Convergence: A Multi-Country Analysis

Federico, Antonio Pietro and Parello, Carmelo Pierpaolo (2025): Productive Public Spending, Knowledge Spillovers and Convergence: A Multi-Country Analysis.

Abstract

This paper develops a multi-country AK model of endogenous growth with international knowledge transmission to analyze the impact of productive public expenditure on growth and convergence. A leader economy drives knowledge advancement, while follower countries benefit from spillovers if their knowledge exceeds a threshold. The findings suggest that public expenditure helps laggard followers acquire foreign technology but does not enhance long-term growth. Empirical analysis using a dynamic panel model confirms the threshold effect: public investment boosts growth only in countries far from the technological frontier, while it is ineffective for those at or beyond the threshold.

• Item Type: MPRA Paper
• Language: English
• Keywords: AK growth, Knowledge spillovers, Development thresholds, Dynamic heterogeneous panels , Cross-Sectional dependence.
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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