We study the optimal degree of fiscal decentralization in a dynamic federal economy where governments decide on budget size and its allocation between public education and infrastructure spending. We find that full centralization of tax and expenditure policies is optimal when infrastructure...

In this paper, we present an overlapping-generations model, where individuals accumulate human capital through formal schooling. We model the role of the public sector in schooling as one of collecting taxes from households and providing inputs to the learning technology. Public expenditures on...

This paper contains a model with which the desirability of persistent urbanization can be examined. There are two regions: city and countryside. Joint restrictions on the technologies in each region and on preferences over the goods produced in each region are the driving force of migration. In...

In this paper, the authors present an infinite-horizon economy where the stock of technological knowledge enhances the productivity of all households. Technological knowledge depends upon public sector investments in R&D. These investments are financed by income taxes. Households in the authors'...