This paper looks at the joint determination of international indebtedness and capital accumulation in a two-country model. National rates of time preference are endogenous, and adjust along an optimal path to come into equality with one another in the steady state. A country's level of indebtedness is positively related to its degree of 'impatience', and its technology advantage, and negatively related to the share of government spending in GDP. Steady state creditor countries tend to have current account surpluses during episodes of world output growth, and vice versa for debtor countries. This gives rise to a possible nonmonotonic adjustment in the current account and in consumption.
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number
761.
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Ventura, Jaume, 2005.
"A Global View of Economic Growth,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 22, pages 1419-1497
Elsevier.
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