Public Debt in an Endogenous Growth Model of Perpetual Youth
AbstractThis paper combines into a single consistent framework the Blanchard-Yaari model of perpetual youth and an endogenous growth model of human capital accumulation. In the steady-state equilibrium of the modelled closed economy, consumption, production, human capital and physical capital all grow at an uniform rate. This rate depends, apart from a vector of parameters, only on the amount of time that decentrally optimizing private households of heterogeneous age allocate to education and training. Contrary to the exogenous growth models of overlapping generations, there is no scope for public debt policy to Pareto-improve welfare in such a model. An increase in public debt reduces the steady-state growth rate of the economy and hence necessarily hurts future generations.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 57 (2000)
Issue (Month): 2 (March)
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Web page: http://www.mohr.de/fa
Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
Find related papers by JEL classification:
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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- Tilemahos Efthimiadis & Panagiotis Tsintzos, 2012. "The Internal-External Debt Ratio and Economic Growth," Economics Bulletin, AccessEcon, vol. 32(1), pages 941-951.
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