Deficit, monetization, and economic growth: a case for multiplicity and indeterminacy
Maxime Menuet (),
Alexandru Minea () and
Patrick Villieu ()
Additional contact information
Patrick Villieu: CNRS, LEO, UMR 7322
Economic Theory, 2018, vol. 65, issue 4, 819-853
Abstract This paper develops an original analysis of deficit monetization in a growth model with transaction costs, in which economic growth interacts with productive public expenditures. This interaction generates two positive balanced growth paths (BGP) in the long run: a high BGP and a low BGP. The transitional dynamics show that multiplicity cannot be rejected if transaction costs affect both consumption and investment expenditures, with possible indeterminacy of the high BGP. Importantly, deficit monetization is shown to reduce the parameter space producing indeterminacy.
Keywords: Endogenous growth; Deficit; Monetization; Indeterminacy; Public debt (search for similar items in EconPapers)
JEL-codes: E41 E52 E62 H62 H63 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s00199-017-1040-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
Working Paper: Deficit, monetization, and economic growth: a case for multiplicity and indeterminacy (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:65:y:2018:i:4:d:10.1007_s00199-017-1040-5
Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2
Access Statistics for this article
Economic Theory is currently edited by Nichoals Yanneils
More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().