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).
Original language | English |
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Pages (from-to) | 261-263 |
Number of pages | 3 |
Journal | Applied Economics Letters |
Volume | 5 |
Issue number | 4 |
DOIs | |
Publication status | Published - Apr 1998 |