PUBLIC-POLICY AND ECONOMIC-GROWTH - JAPAN AND THE UNITED-STATES

In this paper we incorporate a public sector into a simple, constant returns model of economic growth developed by Barro (1990) and Jones and Manuelli (1990). There are interesting implications regarding the relations between the size of government, the productivity of the public sector, the saving behavior, the social security system, and the rate of economic growth. We investigate policy implications of the analytical results in terms of Japanese and U.S. economic growth data.