Government debt and aggregate stability with endogenous growth: Some general results

Greiner A (2014) Working Papers in Economics and Management; 05-2014.
Bielefeld: Bielefeld University, Department of Business Administration and Economics.

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Abstract
We consider a general class of endogenous growth models with infinitely lived households and analyze how different budgetary rules affect the stability of the econ- omy. We show that a discretionary fiscal policy implies that the government always violates its inter-temporal budget constraint along a balanced growth path, whereas a balanced budget rule tends to stabilize the economy. A rule based debt policy makes the economy converge to the balanced growth path provided the reaction of the primary surplus to higher public debt is sufficiently large so that the debt to GDP ratio becomes a mean-reverting process.
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Greiner A. Government debt and aggregate stability with endogenous growth: Some general results. Working Papers in Economics and Management. Vol 05-2014. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2014.
Greiner, A. (2014). Government debt and aggregate stability with endogenous growth: Some general results (Working Papers in Economics and Management, 05-2014). Bielefeld: Bielefeld University, Department of Business Administration and Economics. doi:10.4119/unibi/2915487
Greiner, A. (2014). Government debt and aggregate stability with endogenous growth: Some general results. Working Papers in Economics and Management, 05-2014, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
Greiner, A., 2014. Government debt and aggregate stability with endogenous growth: Some general results, Working Papers in Economics and Management, no.05-2014, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
A. Greiner, Government debt and aggregate stability with endogenous growth: Some general results, Working Papers in Economics and Management, vol. 05-2014, Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2014.
Greiner, A.: Government debt and aggregate stability with endogenous growth: Some general results. Working Papers in Economics and Management, 05-2014. Bielefeld University, Department of Business Administration and Economics, Bielefeld (2014).
Greiner, Alfred. Government debt and aggregate stability with endogenous growth: Some general results. Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2014. Working Papers in Economics and Management. 05-2014.
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