| Title: | Debt policy rule, productive government spending, and multiple growth paths: a note (2013) |
| Authors: | Alexandru Minea ; Patrick Villieu |
| In : | Macroeconomic Dynamics (Vol.17 n°4, June 2013) |
| Article on page: | pp. 947-954 |
| Languages: | French |
| Descriptors: |
[Eurovoc] ECONOMICS > economic conditions > economic development > economic growth [Eurovoc] FINANCE > financing and investment > investment > public investment [Eurovoc] FINANCE > public finance and budget policy > public debt > public borrowing |
| Tags: | deficit ; public investment ; public debt ; endogenous growth ; multiplicity |
| Abstract: | In a very interesting endogenous growth model, Futagami, Iwaisako, and Ohdoi [Macroeconomic Dynamics 12 (2008), 445-462] study the long-run growth effect of borrowing for public investment. Their model exhibits (i) the ltiplicity of balanced growth paths (BGPs) in the long run (two steady states) and (ii) a possible indeterminacy of the transition path to the high-growth BGP. The goal of this note is to show that their results depend on a sharp assumption, namely the definition of the public debt target as a ratio to private capital. If the target is defined in terms of public debt-to-GDP ratio, both results vanish: the model exhibits a unique BGP (no multiplicity) and the adjustment path to this unique equilibrium is determinate (no indeterminacy). |
| Doi : |
DOI : 10.1017/S1365100511000642 
|
| Axe de recherche : | Financement du développement |
| Link for e-copy: | https://halshs.archives-ouvertes.fr/halshs-00829552 |
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