%0 Journal Article
%T Optimal Government Spending Ratio on the Research Sector
%A Zexiong Wu
%J Open Journal of Business and Management
%P 558-567
%@ 2329-3292
%D 2018
%I Scientific Research Publishing
%R 10.4236/ojbm.2018.63042
%X <div style=\"text-align:justify;\">
	This paper investigates the optimal government spending ratio on the research
sector by introducing government effects into Romer¡¯s endogenous
model. The government spending has positive effects on both the final-output
sector and the research sector. Under this circumstance, we first show that
there exists a minimum government spending proportion to maintain endogenous
growth and there are two optimal spending ratios on the research sector
given a constant government proportion. Then we analyze how the government
chooses between these two ratios. When the government is interested
in the balanced growth rate, it will always choose the high spending ratio
on the research sector. But since there is a dynamic transition process in our
model, short-run welfare must be taken into the government¡¯s account. If the
stock of endowed knowledge is much more than that of endowed physical
capital, then the government will choose the low spending ratio on the research
sector.
</div>
%K Government Spending
%K Endogenous Growth
%K Economic Development
%U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=85051