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.
|Length:||26,  p.|
|Date of creation:||Jan 2003|
|Date of revision:|
|Note:||January 8, 2003|
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- 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.
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"Maximum Sustainable Government Debt in the Overlapping Generations Model,"
CEPR Discussion Papers
2076, C.E.P.R. Discussion Papers.
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- 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.
- repec:cup:cbooks:9780521001151 is not listed on IDEAS
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- 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.
- 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,"
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- 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.
- 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 607-25, December.
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