Budget Deficits and Economic Growth

Koichi Futagami and Akihisa Shibata

Public Finance = Finances publiques, 1998, vol. 53, issue 3-4, 331-54

Abstract: This paper investigates the sustainability and welfare effects of government budget deficits by using a simple endogenous growth model with overlapping generations. It is shown that, if the initial volume of government debt and the ratio of primary budget deficits to GDP are not large, then there can exist two steady-growth equilibria, one of which is associated with a higher growth rate and the other of which is associated with a lower growth rate. It is also shown that changes in government spending cannot be Pareto improving although they affect the long-run growth rate and each generation's utility.

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (3)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Budget Deficits and Economic Growth (2003)
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:pfi:pubfin:v:53:y:1998:i:3-4:p:331-54

Access Statistics for this article

More articles in Public Finance = Finances publiques
Bibliographic data for series maintained by Christopher F. Baum ().