Public debt and endogenous growth

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This book explores public debt dynamics within various endogenous growth models, including the AK model and models focused on innovation and human capital accumulation. It examines closed economies, small open economies, and a two-country world. The closed economy model emphasizes the relationship between budget deficits, public debt dynamics, and their impact on capital and output growth. The open economy model investigates the effects on foreign debt growth, while the two-country analysis reveals how public debt growth in one nation influences growth in another. The government either maintains a fixed deficit ratio or a tax rate in each scenario, with steady states derived and stability analyzed. The dynamics resulting from various shocks and policy measures are also examined, supported by numerous diagrams. The author expresses gratitude for the insights provided by Michael Carlberg, along with discussions with Alkis Otto and Justus Haucap. The book is structured into parts, starting with an introduction and followed by detailed sections on the closed economy with AK production, including models, stability analyses, and summaries of findings related to deficit ratios and tax rates.