Equilibrium Growth in a Small Economy Facing an Imperfect World Capital Market

Stephen J Turnovsky

Review of Development Economics, 1997, vol. 1, issue 1, 1-22

Abstract: A growth model of a developing economy facing an upward‐sloping curve of debt is analyzed. Equilibrium is characterized by transitional dynamics in which consumption, capital, and debt converge to a common growth rate. The adjustment is through the debt‐capital ratio, which drives the borrowing rate to a level at which growth rates are equalized. The economy is subject to two externalities: a production externality associated with government expenditure, and a financial externality associated with the upward‐sloping supply of debt. The tax structure that enables the decentalized economy to attain the first‐best equilibrium is characterized.

Date: 1997
References: Add references at CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
https://doi.org/10.1111/1467-9361.00002

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:rdevec:v:1:y:1997:i:1:p:1-22

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1363-6669

Access Statistics for this article

Review of Development Economics is currently edited by E. Kwan Choi

More articles in Review of Development Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().