This paper studies the optimal growth of a developing economy that has a choice to expend a fixed amount of resource for a structural change that advances its production technology. It is shown that structural change is undertaken if capital stock is above a critical level. Economies undertaking...

This paper analyzes the effects of balanced-budgets and deficit-finance policies on the resulting steady-state capital stock in a simple neoclassical growth model. It is shown that the steady-state capital stock may be higher or lower if the government is required to balance its budget in each...