Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119691
Authors: 
Petrucci, Alberto R.
Year of Publication: 
2002
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 80.2002
Abstract: 
The consequences of government debt on capital formation, financial wealth and labor are investigated in a small open economy with demographic heterogeneity. Two alternative types of demographics are considered: one with intragenerational heterogeneity of the ''savers-spenders'' (SS) type, and one with intergenerational heterogeneity of the OLG type. The effects of debt and the financial crowding out morphology strictly depend on the type of demographic heterogeneity. While in the SS economy debt crowds out capital, increases net foreign assets and contracts labor, in the OLG economy it generates the exact opposite results. Our results differ substantially from those observed in a closed economy, where the type of demographic heterogeneity plays no qualitative role for the effects of debt on wealth and factor employment.
Subjects: 
Government debt
Savers-spenders
Overlapping-generations
Capital formation
Net foreign assets
JEL: 
E62
F41
H63
Document Type: 
Working Paper

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