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Discussion Paper Details

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Title: Stabilization Policy, Learning by Doing, and Economic Growth

Author(s): Philippe Martin and Carol Ann Rogers

Publication Date: February 1995

Keyword(s): Cycles, Growth, Learning By Doing and Stabilization Policy

Programme Area(s): International Macroeconomics

Abstract: This paper shows that fiscal policy, when used for stabilization purposes, can have a positive effect on the economy's growth, on human capital accumulation, and on welfare, along the transition path. We introduce symmetric productivity shocks into a model in which productivity is augmented through learning by doing. If future benefits of learning by doing are not fully internalized by workers, then recessions are periods in which opportunities for acquiring experience are foregone. We identify configurations of disturbances and other parameters for which a countercyclical policy maximizes growth and welfare.

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Bibliographic Reference

Martin, P and Rogers, C. 1995. 'Stabilization Policy, Learning by Doing, and Economic Growth'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1130