Public deficits and economic growth

• Type: Article in International Scientific Journal
• Date: 2009

Authors

afonso, o (Author) FEP; alves, rh (Author) FEP; vasconcelos, pb (Author) FEP

Journal

Title: Economic Modelling

Vol. 26 No. 5

Pages: 1101-1109

ISSN: 0264-9993

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 2 Citations

ISI Web of Science

Scopus - 2 Citations

Scientific classification

FOS: Social sciences > Economics and Business

Other information

Authenticus ID: P-003-G13

DOI: 10.1016/j.econmod.2009.04.008

Abstract (EN): Considering an integrated area, this paper deals with the balance between the positive effects in the degree of economic cohesion resulting from R&D subsidies, temporarily granted from an imitator and less developed country, and the external negative effects arising from the eventual creation of excessive public deficits. We propose and numerically solve a model of a monetary union between two countries, one being innovator and the other imitator. Results suggest the pertinence of allowing for a temporary differentiation of fiscal discipline rules in favour of the less developed country. R&D subsidies granted by this country seem to lead to an easier catching-up without producing important negative external effects, also as not hurting severely the conditions for long-run sustainability of public accounts.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 9