TY  - GEN
AB  - In this paper we analyze a descriptive endogenous growth model with public
debt. The government can run into debt, but, the primary surplus is a positive
function of the debt to GDP ratio such that the debt ratio becomes a mean-reverting
process. We show that a balanced budget scenario yields a higher long-run growth
rate than a scenario with permanent deficits if and only if the public deficit exceeds
the net saving out of government bonds. As regards the dynamics, the analysis
shows that multiple balanced growth paths can arise. Further, reducing the reaction
of the primary surplus to a higher public debt can generate endogenous cycles via a
Hopf bifurcation and, for a sufficiently low reaction coefficient, the economy becomes
unstable.
DA  - 2019
DO  - 10.4119/unibi/2934699
KW  - Public debt
KW  - balanced budget
KW  - endogenous growth
KW  - stability
LA  - eng
PY  - 2019
SN  - 2196-2723
TI  - Public debt in a descriptive endogenous growth model
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29346999
Y2  - 2024-11-22T10:44:33
ER  -