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Multiple economic growth equilibria

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  • Saziye Gazioglu
  • W. David Mccausland

Abstract

This paper extends the previous literature on multiple growth equilibria by constructing a multisectoral open economy small macro model. We consider the dynamics of international debt, physical capital accumulation and competitiveness, and show that there exist two distinct stable equilibria, one is a high growth equilibrium, corresponding to high investment and net international credit, the other is a low growth equilibrium corresponding to low investment and net international debt. We highlight the important link between economic growth (a flow variable) and net international debt/credit (a stock variable).

Suggested Citation

  • Saziye Gazioglu & W. David Mccausland, 1998. "Multiple economic growth equilibria," Applied Economics Letters, Taylor & Francis Journals, vol. 5(4), pages 261-263.
    • Handle: RePEc:taf:apeclt:v:5:y:1998:i:4:p:261-263
    DOI: 10.1080/135048598354942
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    References listed on IDEAS

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    1. Philip L. Brock, 1996. "International Transfers, the Relative Price on Non-Traded Goods, and the Current Account," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 163-180, February.
    2. Grandmont, Jean-Michel, 1985. "On Endogenous Competitive Business Cycles," Econometrica, Econometric Society, vol. 53(5), pages 995-1045, September.
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