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- Title
A CLOSED‐FORM SOLUTION FOR DETERMINING THE BURDEN OF PUBLIC DEBT IN NEOCLASSICAL GROWTH MODELS.
- Authors
Dedák, István; Dombi, Ákos
- Abstract
ABSTRACT: This paper develops a new approach, termed as the stock approach, to calculate the steady‐state output loss caused by public debt in neoclassical growth models. The novelty of our stock approach is that it provides a closed‐form solution to the steady‐state output‐debt relationship. The main conclusion of the paper is that the steady‐state burden of public debt is country‐specific in neoclassical growth models and it decreases with the private saving rate and increases with the population growth rate, with the exception of the special case where Ricardian equivalence holds.
- Subjects
PUBLIC debts; MATHEMATICAL models of economic development; RICARDIAN equivalence theorem; POPULATION; CROWDING out (Economics)
- Publication
Bulletin of Economic Research, 2018, Vol 70, Issue 1, p88
- ISSN
0307-3378
- Publication type
Article
- DOI
10.1111/boer.12125