Social Infrastructure and the Preservation of Physical Capital: Equilibria and Transitional Dynamics

• Autor(a) principal: Soares, Helena
• Data de Publicação: 2018
• Outros Autores: Neves Sequeira, Tiago, Macias Marques, Pedro, Gomes, Orlando, Ferreira-Lopes, Alexandra
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10174/22200; https://doi.org/Helena Soares, Tiago Neves Sequeira, Pedro Macias Marques, Orlando Gomes, Alexandra Ferreira-Lopes, Social infrastructure and the preservation of physical capital: Equilibria and transitional dynamics, Applied Mathematics and Computation, Volume 321, 2018, Pages 614-632, ISSN 0096-3003, https://doi.org/10.1016/j.amc.2017.10.056.; https://doi.org/10.1016/j.amc.2017.10.056
• topic: Social infrastructure; Physical capital depreciation; Endogenous growth; Multiple equilibria; Gröbner bases

We study the mechanisms according to which social infrastructure influences the preser- vation of physical capital and, consequently, economic growth. The model considers that social infrastructure is a specific type of human capital, which acts in order to preserve already existing physical capital, by, e.g., reducing the incentive for rent seeking or cor- ruption. Using an innovative methodology in economics, the Gröbner bases, we study the equilibrium of our model and conclude for the existence of two feasible steady-states or of unicity according to different combinations of parameters, highlighting a trade-off between consumption and production on one hand and social infrastructure and physical capital accumulation, on the other. We also present sufficient conditions for saddle-path stabil- ity. Finally, we describe transitional dynamics and calculate welfare effects from which we show that strengthening social infrastructure increases welfare.