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A non-monotonic relationship between public debt and economic growth: the effect of financial monopsony

A non-monotonic relationship between public debt and economic growth: the effect of financial... AbstractA small amount of fixed-interest public debt may raise economic growth, if the financial sector is monopsonistic. We show that there are also redistributive gains favouring financial outsiders, defined by their lack of access to a stock exchange. The requirements are that issuing public debt raises the monopsony interest rate, thus reduces the value of financial sector equity, which, like public debt, is another source of crowding-out. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The B.E. Journal of Macroeconomics de Gruyter

A non-monotonic relationship between public debt and economic growth: the effect of financial monopsony

Roberts, Mark A.
The B.E. Journal of Macroeconomics , Volume 17 (2): 1 – Jun 9, 2017
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Publisher
de Gruyter
Copyright
©2017 Walter de Gruyter GmbH, Berlin/Boston
ISSN
1935-1690
eISSN
1935-1690
DOI
10.1515/bejm-2015-0157
Publisher site
See Article on Publisher Site

Abstract

AbstractA small amount of fixed-interest public debt may raise economic growth, if the financial sector is monopsonistic. We show that there are also redistributive gains favouring financial outsiders, defined by their lack of access to a stock exchange. The requirements are that issuing public debt raises the monopsony interest rate, thus reduces the value of financial sector equity, which, like public debt, is another source of crowding-out.

Journal

The B.E. Journal of Macroeconomics – de Gruyter

Published: Jun 9, 2017

References

  • Maximal Sustainable Government Debt in the Overlapping Generations Model
  • Can Pay-As-You-Go Pensions Raise the Capital Stock? 2003
  • Fiscal Sustainability using Growth-Maximising Debt Targets
  • The European Pension Management Industry Pensions Institute Discussion Paper School University
    Davis
  • Public Debt as Private Liquidity
  • Debt and Growth is There a Non-Monotonic Relation?