TY - JOUR
T1 - Economic growth and public expenditure composition
T2 - Optimal adjustment using the gradient method
AU - Miyakoshi, Tatsuyoshi
AU - Tsukuda, Yoshihiko
AU - Kono, Tatsuhito
AU - Koyanagi, Makoto
N1 - Funding Information:
We would like to thank an anonymous referee and the editor of the journal for useful suggestions. Earlier versions of this paper were presented at the 2006 East Asian Economic Association Conference (in Beijing), the 2006 All China Economic International Conference (in Hong Kong), the 2007 Western Regional Science Association Conference (in Newport Beach) and the 2007 Far Eastern Meeting of Econometric Society (in Taipei). We are very grateful to Kazuo Mino, Koichi Futagami, Komei Sasaki, Koichi Mera, Fred Kwan, Joseph Capuno, Mike Leu, Kang Chen, Eric Leeper, Ping Wang and participants at the conferences for their helpful comments. The research of the first and second authors was supported by Grants-in-Aid 16530204 and 18530153, respectively, from the Ministry of Education, Culture, Sport, Science and Technology of Japan, and the 2006 Foundation for Advanced Studies on International Development.
PY - 2010/9
Y1 - 2010/9
N2 - Previous studies have looked at how the components of fiscal spending affect economic growth. However, we explicitly enquire into how to adjust the components in order to achieve the highest rate of economic growth starting from the present shares of components, by introducing a gradient method. The resulting optimal adjustment shares are proportional to the deviations from the average over elements of a gradient vector. The optimal adjustment share is completely estimated by using linear regression with any choice of omitted variable. The paper also provides an illustrative example taken from the annual panel data for the Japanese prefectural governments.
AB - Previous studies have looked at how the components of fiscal spending affect economic growth. However, we explicitly enquire into how to adjust the components in order to achieve the highest rate of economic growth starting from the present shares of components, by introducing a gradient method. The resulting optimal adjustment shares are proportional to the deviations from the average over elements of a gradient vector. The optimal adjustment share is completely estimated by using linear regression with any choice of omitted variable. The paper also provides an illustrative example taken from the annual panel data for the Japanese prefectural governments.
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U2 - 10.1111/j.1468-5876.2009.00493.x
DO - 10.1111/j.1468-5876.2009.00493.x
M3 - Article
AN - SCOPUS:77955945352
VL - 61
SP - 320
EP - 340
JO - Japanese Economic Review
JF - Japanese Economic Review
SN - 1352-4739
IS - 3
ER -
