| dc.description.abstract | Economic growth is the development of economic activities leading to the increase of goods and services within community. Government expenditure is one of the factors that affect the rate of economic growth, it is financed through tax revenues. This paper discusses two types of government expenditures which affect long-term economic growth. The first type is government expenditures on infrastructure investments, such as roads, airports, ports, research, and development. In the second type, the government expenditures are invested on technology, such as investment on education. The tax rate that maximizes economic growth is affected by the elasticity of public capital in the first type of government expenditures, while the second type is affected by the elasticity of private capital. Simulation results show that the second type of government expenditure produces higher economic growth rate than the first type. | en |
