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| Author: | Batina, R. G. Ihori, T. |
| Title: | Austerity measures under debt finance in a world economy with overlapping generations. |
| Journal: | Economic Studies Quarterly
1993 : JUN, VOL. 44:2, p. 117-130 |
| Index terms: | DEBT FINANCING WORLD ECONOMY INTEREST RATES BANKRUPTCY |
| Language: | eng |
| Abstract: | An increase in the foreign country's stock of debt will raise the world interest rate and may cause the world economy to begin following a divergent path which eventually leads to bankruptcy. A number of austerity measures are discussed, e.g. tax increases, public spending decreases and institutional reforms. Each will have a different effect on the steady state equilibrium and the dynamic adjustment path of the economy and paradoxical results may occur depending on the response of capital accumulation. |
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