Program > Papers by speaker > Menuet Maxime

Monday 12
A7 - Macroeconomics, Growth I
Chair: Thomas Seegmuller
› 10:40 - 11:05 (25min)
› Auditorium - 2nd floor
Public Debt, Endogenous Growth Cycles and Indeterminacy
Maxime Menuet  1, *@  , Patrick Villieu  1@  , Alexandru Minea  2@  
1 : Laboratoire d'Economie d'Orléans  (LEO)
Laboratoire d'Economie d'Orléans
2 : centre d'études et de recherches sur le développement international  (CERDI)
centre d'études et de recherches sur le développement international
* : Corresponding author

This paper presents a theoretical setup for studying nonlinear effects of pubic debt in an endogenous growth model with cycles. Our results are threefold. (i) From a long-run perspective, our model exhibits multiplicity, i.e. a high-growth and a low-growthbalanced growth path (BGP), due to the interaction between the government's budget constraint and households optimal saving behavior. (ii) Turning to local dynamics, while the high equilibrium is saddle-path stable, the topological behavior of the low equilibrium is more complex. Indeed, the low BGP can be locally determined, over-determined, or under-determined. In the latter case, a supercritical Hopf bifurcation occurs, leading to limit-cycles. (iii) As regards global dynamics, three typical configurations arise: local and global determinacy; local determinacy and global indeterminacy; local and global indeterminacy. Specifically, global bifurcations can emerge, in relation with the degree of social acceptance to reduce non-distorsive components of government budget.

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