Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105768
Authors: 
Skott, Peter
Ryoo, Soon
Year of Publication: 
2013
Series/Report no.: 
Working Paper, University of Massachusetts, Department of Economics 2013-10
Abstract: 
We show that (i) dynamic inefficiency may be empirically relevant in a modified Diamond model with imperfect competition, (ii) if fiscal policy is used to avoid inefficiency and maintain an optimal capital intensity, the required debt ratio will be inversely related to the growth rate, and (iii) austerity policies reductions in government consumption and entitlement programs for the old generation raise the required debt ratio.
Subjects: 
Public debt
dynamic efficiency
growth effects
austerity
JEL: 
E62
E22
Document Type: 
Working Paper

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