Budget Deficits and Economic Growth
This paper investigates the sustainability and welfare effects of government budget deficits by using a simple endogenous growth model with overlapping generations. It is shown that, if the initial volume of government debt and the ratio of primary budget deficits to GDP are not large, then there can exist two steady-growth equilibria, one of which is associated with a higher growth rate and the other of which is associated with a lower growth rate. It is also shown that changes in government spending cannot be Pareto improving although they affect the long-run growth rate and each generation's utility.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 53 (1998)
Issue (Month): 3-4 ()
|Contact details of provider:|
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.:
- Azariadis, Costas & Reichlin, Pietro, 1996. "Increasing returns and crowding out," Journal of Economic Dynamics and Control, Elsevier, vol. 20(5), pages 847-877, May.
- Joydeep Bhattacharya & Noritaka Kudoh, 2002.
"Tight money policies and inflation revisited,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 35(2), pages 185-217, May.
- Bhattacharya, Joydeep & Kudoh, N, 2002. "Tight Money Policies and Inflation Revisited," Staff General Research Papers Archive 5085, Iowa State University, Department of Economics.
- Alogoskoufis, George S. & van der Ploeg, Frederick, 1991. "On budgetary policies, growth, and external deficits in an interdependent world," Journal of the Japanese and International Economies, Elsevier, vol. 5(4), pages 305-324, December.
- Kazuo Mino & Akihisa Shibata, 2000. "Growth and Welfare Effects of Monetary Expansion in an Overlapping-generations Economy," The Japanese Economic Review, Japanese Economic Association, vol. 51(3), pages 407-430, 09.
- Futagami, Koichi & Morita, Yuichi & Shibata, Akihisa, 1993. " Dynamic Analysis of an Endogenous Growth Model with Public Capital," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 607-625, December.
- Christ, Carl F, 1979. "On Fiscal and Monetary Policies and the Government Budget Restraint," American Economic Review, American Economic Association, vol. 69(4), pages 526-538, September.
- Neil Rankin & Barbara Roffia, 2003. "Maximum Sustainable Government Debt in the Overlapping Generations Model," Manchester School, University of Manchester, vol. 71(3), pages 217-241, 06.
- Rankin, N. & Roffia, B., 1999. "Maximum Sustainable Government Debt in the Overlapping Generations Model," The Warwick Economics Research Paper Series (TWERPS) 521, University of Warwick, Department of Economics.
- Rankin, Neil & Roffia, Barbara, 1999. "Maximum Sustainable Government Debt in the Overlapping Generations Model," CEPR Discussion Papers 2076, C.E.P.R. Discussion Papers.
- Trehan, Bharat & Walsh, Carl E, 1991. "Testing Intertemporal Budget Constraints: Theory and Applications to U.S. Federal Budget and Current Account Deficits," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 206-223, May.
- Bharat Trehan & Carl E. Walsh, 1988. "Testing intertemporal budget constraints: theory and applications to U. S. federal budget and current account deficits," Working Papers in Applied Economic Theory 88-03, Federal Reserve Bank of San Francisco.
- Ganelli, Giovanni, 2007. "Fiscal policy rules in an overlapping generations model with endogenous labour supply," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 1015-1036, March.
- Giovanni Ganelli, 2002. "Fiscal Policy Rules in an Overlapping Generations Model with Endogenous Labour Supply," Trinity Economics Papers 200215, Trinity College Dublin, Department of Economics.
- Futagami, Koichi & Shibata, Akihisa, 1999. "Welfare effects of bubbles in an endogenous growth model," Research in Economics, Elsevier, vol. 53(4), pages 381-403, December. Full references (including those not matched with items on IDEAS)