||Exchange rate and tax policies in an economic development model with public capital
村上 弘毅SASAKI Hiroaki
The purpose of this study is to examine the effects of exchange rate and tax policies on economic growth in a model of economic growth with public infrastructures. Public infrastructure, such as roads, airports, bridges, ports and electricity, gas and water services, is, in general, considered to have a positive influence on economic activities and there have been several empirical studies to evaluate this positive impact. On the basis of these preceding works, our present study provides a model of economic development in which public infrastructure enhances productivity. Our analysis shows that wage flexibility affects economic stability. Specifically, we find that there exists a threshold value in the degree of wage flexibility; that the stationary point is unstable or stable, respectively, when the degree is less than or more than the threshold value; that cyclical fluctuations arise when the degree is suficiently close to the threshold value.