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OPTIMAL GROWTH, DEBT, CORRUPTION, AND R&D

  • Charles-Henri Dimaria (a1) and Cuong Le Van (a1)
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).

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Corresponding author
Address correspondence to: Cuong Le Van, CERMSEM, Université de Paris 1, 106-110 Boulevard de l'Hôpital, 74647 Paris CEDEX 13, France; e-mail: LEVAN@UNIV-PARIS1.FR.
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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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