Endogenous Growth, Government Debt and Budgetary Regimes: A Corrigendum

Alexandru Minea and Patrick Villieu

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Abstract: We correct an error in [Greiner, A., Semmler, W., 2000. Endogenous growth, government debt and budgetary regimes. Journal of Macroeconomics 22, 363-384] concerning the effect of different debt rules on long term economic growth. We focus on Proposition1 stating that, in some cases, using deficits to finance productive public expenditures, may raise long term economic growth. We propose an analytical proof, showing that the cases in which deficits raise the balanced growth path imply Ponzi games and are, therefore, infeasible. Consequently, using deficits to finance public investment is always detrimental to economic growth in the long-run in their model.

Keywords: Fiscal deficit; Public investment; endogenous growth; Fiscal rules (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (15)

Published in Journal of Macroeconomics, 2010, 32, pp.709-711

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00630713

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