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Faut-il financer l'investissement public par emprunt ?. Les enseignements d'un modèle de croissance endogène

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  • Alexandru Minea
  • Patrick Villieu

Abstract

In this paper, we look for long-run and short-run effects of fiscal deficits on economic growth and welfare in a standard endogenous growth model. We show that, under very general hypotheses, the Golden Rule of Public Finance?, which allows a government to run a deficit if this deficit is devoted to public investment, leads to a lower balanced growth path in the long-run, and eventually in the short-run. Welfare effects are more difficult to assess. Our model shows that fiscal deficit rules like the Golden Rule may improve or weaken intertemporal welfare, depending on parameter values, and especially on the value of the consumption elasticity of substitution. Classification JEL : H62, H63, E62

Suggested Citation

  • Alexandru Minea & Patrick Villieu, 2008. "Faut-il financer l'investissement public par emprunt ?. Les enseignements d'un modèle de croissance endogène," Revue économique, Presses de Sciences-Po, vol. 59(1), pages 5-32.
    • Handle: RePEc:cai:recosp:reco_591_0005
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    Cited by:

    1. Alexandru Minea & Patrick Villieu, 2008. "Un réexamen de la relation non linéaire entre déficits budgétaires et croissance économique," Revue économique, Presses de Sciences-Po, vol. 59(3), pages 561-570.
    2. Minea, Alexandru, 2008. "The Role of Public Spending in the Growth Theory Evolution," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(2), pages 99-120, June.

    More about this item

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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