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Optimal Growth, Debt, Corruption, And R D

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  • Dimaria, Charles-Henri
  • Le Van, Cuong

Abstract

This paper analyzes optimal paths in a one-sector growth model when the technology is not convex. In such a case, we prove that optimal paths converge to the upper steady state iff the initial wealth is above a critical level. Then, we first show that, thanks to debt and or R D, the poverty trap may be avoided. Second, we introduce a distortion: corruption that mostly has dramatic consequences on growth, but may have a beneficial effect if it is not high and if it improves productivity (incentive effect).

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Bibliographic Info

Article provided by Cambridge University Press in its journal Macroeconomic Dynamics.

Volume (Year): 6 (2002)
Issue (Month): 05 (November)
Pages: 597-613

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Handle: RePEc:cup:macdyn:v:6:y:2002:i:05:p:597-613_01

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Cited by:
  1. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5 Elsevier.
  2. Matheus Pereira & Wilson Cruz Vieira, 2010. "Corruption in a neoclassical growth model with a non-convex production function," International Review of Economics, Springer, vol. 57(3), pages 335-346, September.

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