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| Author: | Milbourne, R. |
| Title: | Growth, capital accumulation and foreign debt |
| Journal: | Economica
1997 : FEB, VOL. 64:253, p. 1-13 |
| Index terms: | CAPITAL ACCUMULATION GROWTH FOREIGN DEBTS POPULATION MACROECONOMIC MODELS |
| Language: | eng |
| Abstract: | This study explores the relationship between population growth, growth, capital accumulation and foreign debt, using an open economy neoclassical growth model to look at what macroeconomic forces explain why some countries accumulated debt and some others did not. A condition for debt stabilization relates the marginal propensity to consume out of wealth to the population growth rate and real rate of interest. Higher natural population growth can be associated with a higher level of net foreign debt per head, but this doesn't follow for higher rates of immigration, or necessarily for higher rates of productivity growth. A fiscal policy rule is characterized, which would prevent economies from entering debt traps following adverse shocks. |
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