Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/30625 
Year of Publication: 
2009
Series/Report no.: 
CESifo Working Paper No. 2631
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We consider the optimal education policies of a small economy whose government has a limited budget. Initially, the economy is closed and the government chooses its education policy to maximize welfare under autarky. Then the economy trades with the rest of the world. Lastly, the government chooses a new education policy that maximizes welfare under trade. Is it ever optimal for the government to choose its new policy so that it reverses the economy's comparative advantage? We find that if the budget stays fixed when it is optimal to 'move up the skills chain' it is not feasible. In such a case a foreign loan is welfare improving. A move in the opposite direction can be optimal and when it is optimal it is also feasible.
Subjects: 
patterns of trade
education policy
welfare
JEL: 
F11
O15
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
260.37 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.