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Optimal Growth, Debt, Corruption, And R&D

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  • Dimaria, Charles-Henri
  • Le Van, Cuong

Abstract

This paper analyzes optimal paths in a one-sector growth model when the technology is not convex. In such a case, we prove that optimal paths converge to the upper steady state iff the initial wealth is above a critical level. Then, we first show that, thanks to debt and/or R&D, the poverty trap may be avoided. Second, we introduce a distortion: corruption that mostly has dramatic consequences on growth, but may have a beneficial effect if it is not high and if it improves productivity (incentive effect).

Suggested Citation

  • Dimaria, Charles-Henri & Le Van, Cuong, 2002. "Optimal Growth, Debt, Corruption, And R&D," Macroeconomic Dynamics, Cambridge University Press, vol. 6(5), pages 597-613, November.
    • Handle: RePEc:cup:macdyn:v:6:y:2002:i:05:p:597-613_01
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    Cited by:

    1. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5, Elsevier.
    2. Olivier Bruno & Cuong Van & Benoît Masquin, 2009. "When does a developing country use new technologies?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(2), pages 275-300, August.
    3. Varvarigos, Dimitrios, 2023. "Cultural persistence in corruption, economic growth, and the environment," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    4. Matheus Pereira & Wilson Cruz Vieira, 2010. "Corruption in a neoclassical growth model with a non-convex production function," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 57(3), pages 335-346, September.

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