Multiple economic growth equilibria

Saziye Gazioglu and W. David Mccausland

Applied Economics Letters, 1998, vol. 5, issue 4, 261-263

Abstract: This paper extends the previous literature on multiple growth equilibria by constructing a multisectoral open economy small macro model. We consider the dynamics of international debt, physical capital accumulation and competitiveness, and show that there exist two distinct stable equilibria, one is a high growth equilibrium, corresponding to high investment and net international credit, the other is a low growth equilibrium corresponding to low investment and net international debt. We highlight the important link between economic growth (a flow variable) and net international debt/credit (a stock variable).

Date: 1998
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DOI: 10.1080/135048598354942

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