Estimated human capital externalities in an endogenous growth framework

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Guest speakerJim Malley, Professor of Economics, University of Glasgow

Seminar topic: To better understand the quantitative implications of human capital externalities at the aggregate level, we estimate a two-sector endogenous growth model with knowledge spill-overs. To achieve this, we account for trend growth in a model consistent fashion and employ a Markov-chain Monte-Carlo (MCMC) algorithm to estimate the model's posterior parameter distributions. Using U.S. quarterly data from 1950-2017, we find significant positive externalities to aggregate human capital. Our analysis further shows that eliminating this market failure leads to sizeable increases in education-time, endogenous growth and aggregate welfare.

Speaker bioJim Malley is a Professor of Economics in the Department of Economics at the University of Glasgow. Previously, he was a faculty member at the University of Stirling and an economic analyst with the U.S. Federal Government. His research interests include business cycles and growth, fiscal policy, productivity and inequality. Publications include papers in the Review of Economics and Statistics, European Economic Review, Journal of Economic Dynamics and Control, Scandinavian Journal of Economics, Oxford Economic Papers, Journal of Human Capital, Macroeconomic Dynamics, Canadian Journal of Economics, and Economica.