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OPTIMAL GROWTH, DEBT, CORRUPTION, AND R&D

Published online by Cambridge University Press:  26 September 2002

Charles-Henri Dimaria  and
Cuong Le Van
Charles-Henri Dimaria
Affiliation:
Université de Paris 1
Cuong Le Van
Affiliation:
Université de Paris 1
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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).

Keywords

Optimal GrowthDebtCorruptionR&D
Type
ARTICLES
Information
Macroeconomic Dynamics , Volume 6 , Issue 5 , November 2002 , pp. 597 - 613
Copyright
© 2002 Cambridge University Press

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