Dynamic analysis of reductions in public debt in an endogenous growth model with public capital
| Autor: | Noritaka Maebayashi, Koichi Futagami, Takeo Hori |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2017 |
| Předmět: |
Economics and Econometrics
Fiscal consolidation Debt policy rule Public capital Welfare Endogenous growth Endogenous growth theory Maastricht Treaty jel:E62 media_common.quotation_subject 05 social sciences Government debt jel:H63 Monetary economics jel:H54 Stability and Growth Pact Debt 0502 economics and business Economics media_common.cataloged_instance 050207 economics European union 050205 econometrics media_common |
| Zdroj: | Macroeconomic Dynamics. 21(No. 6):1454-1483 |
| Popis: | We construct an endogenous growth model that includes productive public capital and government debt. We assume that the government debt-to-GDP ratio is gradually adjusted to a target level, reflecting the permanent commitment rules in the Stability and Growth Pact or the Maastricht Treaty in the European Union (i.e., the well-known 60% rule). These rules affect government borrowing and public investment. Here, we examine the welfare implications of the permanent commitment rules. We find that fiscal consolidation based on the rules improves social welfare. Moreover, the improvement in welfare accelerates as fiscal consolidation progresses more rapidly. Last, we also discuss and derive the optimal long-run debt-to-GDP ratio. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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