National Debt Sustainability and the Dynamics in the Economy of Diamond
AbstractWe analyze the effect of a constant debt policy on capital accumulation and provide an indepth treatment of the dynamics in the economy of Diamond. We derive the conditions for avoiding a debt crisis in both the short-run and the long-run and provide geometrical tools to analyze the issue of sustainability. There is always a level of debt enduring that any level of capital between 0 and an upper limit, and in particular the Golden rate equilibrium, exists as a steady-state equilibrium ,yet it is not necessarily stalbe. We also discuss poverty trap issues.
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Bibliographic InfoPaper provided by Universite Aix-Marseille III in its series G.R.E.Q.A.M. with number 99a56.
Length: 20 pages
Date of creation: 1999
Date of revision:
Contact details of provider:
Postal: G.R.E.Q.A.M., (GROUPE DE RECHERCHE EN ECONOMIE QUANTITATIVE D'AIX MARSEILLE), CENTRE DE VIEILLE CHARITE, 2 RUE DE LA CHARITE, 13002 MARSEILLE.
Web page: http://www.greqam.fr/
More information through EDIRC
POVERTY ; BUSINESS CYCLES ; ECONOMIC GROWTH ; DEBT;
Other versions of this item:
- de la Croix, David & Michel, Philippe, 1999. "National Debt Sustainability and the Dynamics in the Economy of Diamond," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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