search query: @author Ploeg, F. van der / total: 18
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| Author: | Ploeg, F. van der |
| Title: | Budgetary policies, foreign indebtedness , the stock market, and economic growth |
| Journal: | Oxford Economic Papers
1996 : JUL, VOL. 48:3, p. 382-396 |
| Index terms: | STOCK MARKETS ECONOMIC GROWTH BUDGETING |
| Language: | eng |
| Abstract: | This paper analyses a small open economy with overlapping generations, endogenous growth, and a risk premium on foreign debt. A balanced-budget increase in public consumption or a rise in covernment debt raises the ratio of foreign debt to domestic income and the interest rate, but depresses economic growth. Supply-side policies aimed at internalising production externalities boost foreign indebtedness, the interest rate, and economic growth. A higher global interest rate leads, if initial foreign indebtedness is not too large, to a lower foreign debt and, if a country is dragged down by large levels of foreign debt, lower economic growth. |
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