Public consumer goods, output-generated variable returns, and labor supply

Sajid Anwar

    Research output: Contribution to journalComment/debate


    Abstract This paper develops a simple general-equilibrium model of a closed economy. The economy under consideration produces two final goods, one private and one public, which are both produced with labor and an intermediate good under constant returns to scale. The intermediate good is produced by labor alone, and its production is subject to output-generated variable returns to scale. The public good can be interpreted as government spending on environmental quality, police protection, cultural activities, and publicly funded health care. The model is used to examine the impact of an exogenous change in labor supply on the size of the government, relative prices, and welfare. Within the context of the present study, an increase in labor supply can be attributed to either exogenous immigration or population growth. The model is also used to examine the relationship between the size of the country and the pattern of trade.
    Original languageEnglish
    Pages (from-to)201-215
    Number of pages15
    JournalJournal of Economics
    Issue number2
    Publication statusPublished - 1997


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