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Government Debt and Capital Accumulation in the Blanchard-Cass-Yaari OLG Model


  • Bo Sandemann Rasmussen

    () (Department of Economics, University of Aarhus, Denmark)


It is shown that although government debt in principle has an ambiguous effect on the steady state capital stock in an OLG model of the Blanchard-Cass-Yaari variety, once stability of the steady state equilibrium is imposed there is an unambiguous negative relation between the level of government debt and the capital stock.

Suggested Citation

  • Bo Sandemann Rasmussen, "undated". "Government Debt and Capital Accumulation in the Blanchard-Cass-Yaari OLG Model," Economics Working Papers 2000-14, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2000-14

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    References listed on IDEAS

    1. Effrosyni Diamantoudi & Licun Xue, 2003. "Farsighted stability in hedonic games," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(1), pages 39-61, August.
    2. Gertler, Mark, 1999. "Government debt and social security in a life-cycle economy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 61-110, June.
    3. Elliott, Graham & Jansson, Michael, 2003. "Testing for unit roots with stationary covariates," Journal of Econometrics, Elsevier, vol. 115(1), pages 75-89, July.
    4. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
    5. Jamsheed Shorish, "undated". "Quasi-Static Macroeconomic Systems," Economics Working Papers 2000-3, Department of Economics and Business Economics, Aarhus University.
    6. Niels Haldrup & Peter Lildholdt, 2005. "Local power functions of tests for double unit roots," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 59(2), pages 159-179.
    7. Rosholm, Michael & Svarer, Michael, 2001. "Structurally dependent competing risks," Economics Letters, Elsevier, vol. 73(2), pages 169-173, November.
    8. Niels Haldrup & Peter Lildholdt, "undated". "On the Robustness of Unit Root Tests in the Presence of Double Unit Roots," Economics Working Papers 2000-1, Department of Economics and Business Economics, Aarhus University.
    9. Licun Xue, "undated". "A Notion of Consistent Rationalizability - Between Weak and Pearce's Extensive Form Rationalizability," Economics Working Papers 2000-4, Department of Economics and Business Economics, Aarhus University.
    10. Xue, Licun, 2002. "Stable agreements in infinitely repeated games," Mathematical Social Sciences, Elsevier, vol. 43(2), pages 165-176, March.
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    More about this item


    OLG model; government debt; stability; capital accumulation;

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt


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