Public debt in a basic endogenous growth model

Greiner A (2012)
Economic Modelling 29(4): 1344-1348.

Journal Article | Published | English

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Abstract
We work out the mechanism that makes public debt affect the allocation of resources in the long-run. To do so we analyze an AK growth model with elastic labor supply and a government sector. The government levies a distortionary income tax and issues bonds to finance lump-sum transfers and non-distortionary public spending. We show that the long-run growth rate is the smaller the higher the debt ratio if the government adjusts public spending to fulfill its inter-temporal budget constraint. If the government adjusts lump-sum transfers the public debt ratio does not affect the balanced growth rate. (C) 2012 Elsevier B.V. All rights reserved.
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Greiner A. Public debt in a basic endogenous growth model. Economic Modelling. 2012;29(4):1344-1348.
Greiner, A. (2012). Public debt in a basic endogenous growth model. Economic Modelling, 29(4), 1344-1348.
Greiner, A. (2012). Public debt in a basic endogenous growth model. Economic Modelling 29, 1344-1348.
Greiner, A., 2012. Public debt in a basic endogenous growth model. Economic Modelling, 29(4), p 1344-1348.
A. Greiner, “Public debt in a basic endogenous growth model”, Economic Modelling, vol. 29, 2012, pp. 1344-1348.
Greiner, A.: Public debt in a basic endogenous growth model. Economic Modelling. 29, 1344-1348 (2012).
Greiner, Alfred. “Public debt in a basic endogenous growth model”. Economic Modelling 29.4 (2012): 1344-1348.
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