Money, national debt, and economic growth

John Z. Drabicki, Akira Takayama

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


This paper develops a dynamic model which allows for government spending, taxation, and the endogeneity of the money supply. As an example of an application of our framework, we consider the well known stability problem of the two asset (money and physical assets) neoclassical "money-and-growth" literature. We conclude, among other things, that the usual saddle-point instability result under myopic perfect foresight with proportional savings behavior can be reversed by introducing a third asset (securities). It is further argued that this result is "robust" as it holds under various policy rules (including the traditional case of national debt growing at a constant rate).

Original languageEnglish (US)
Pages (from-to)356-367
Number of pages12
JournalJournal of Economic Theory
Issue number2
StatePublished - Aug 1984

ASJC Scopus subject areas

  • Economics and Econometrics


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