In a very interesting endogenous growth model, Futagami, Iwaisako, and Ohdoi [Macroeconomic Dynamics 12 (2008), 445–462] study the long-run growth effect of borrowing for public investment. Their model exhibits (i) the multiplicity of balanced growth paths (BGPs) in the long run (two steady states) and (ii) a possible indeterminacy of the transition path to the high-growth BGP. The goal of this note is to show that their results depend on a sharp assumption, namely the definition of the public debt target as a ratio to private capital. If the target is defined in terms of public debt–to–GDP ratio, both results vanish: the model exhibits a unique BGP (no multiplicity) and the adjustment path to this unique equilibrium is determinate (no indeterminacy).

In this paper, we look for long‐run and short‐run effects of fiscal deficits on economic growth and welfare in a standard endogenous growth model. We show that, under very general hypotheses, the ‘golden rule of public finance’, which allows a government to run public‐investment‐oriented fiscal deficits, leads to a lower balanced‐growth path in the long run, and eventually in the short run, compared with balanced‐budget rules. Welfare effects are more difficult to assess, and depend on the form of the utility function. Our model shows that debt rules such as the golden rule may improve (if the consumption elasticity of substitution is ‘low’) or weaken (if the consumption elasticity of substitution is ‘high’) intertemporal welfare. Consequently, a balanced‐budget rule does not necessarily dominate debt rules from the point of view of welfare, while it does from the point of view of long‐run economic growth.

In this paper, we look for long-run and short-run effects of fiscal deficits on economic growth in an endogenous growth model with productive public spending that may be financed by public deficit and debt. The model shows a multiplicity of long-run balanced growth paths (a high-growth and a low-growth steady state) and a possible indeterminacy of the transition path, which may be consistent with the empirical literature, which exhibits strong nonlinear responses of economic growth to fiscal deficits. Starting from the high-growth steady state, a positive impulse in the deficit ratio exerts an adverse effect on economic growth in the long run, after an initial rise. Starting from the low-growth steady state, the situation may be radically undetermined, and the effect of fiscal deficit impulses is subjected to “optimistic” or “pessimistic” views on public-debt sustainability.

We analyze the channels through which institutional quality can impact the corruption–growth nexus. To do this, we develop an endogenous growth model and test its implications empirically, through panel data models using GMM and PSTR settings. Our sample consists of 136 developed and developing countries analyzed over the period 1984–2015. We show, both theoretically and empirically, that (i) the corruption–growth relation can be subject to nonlinearities highly influenced by countries’ institutional development; and (ii) private investment and public spending are two main channels through which institutional quality affects, positively or negatively, the relation between corruption and economic growth.

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Cet article présente un modèle simple de croissance endogène dans lequel le secteur financier améliore l’efficacité de la transformation de l’épargne en investissement. Le modèle fait apparaître l’existence de trajectoires multiples de croissance endogène à long terme, et la possibilité d’une relation non linéaire entre le développement financier et la croissance, le niveau de développement financier exerçant un effet de seuil dans cette relation. Les tests empiriques réalisés selon la méthode PSTR ( Panel Smooth Threshold Regression ) sur un panel de 71 pays sur la période 1960-2006 confirment cet effet de seuil : la relation entre développement financier et croissance est positive lorsque le développement financier est relativement faible, mais son signe devient difficile à déterminer dans les pays financièrement développés. Cet effet de seuil est corroboré lorsque l’endogénéité du développement financier est prise en compte à l’aide de la méthode des moments généralisés (GMM) sur panel dynamique.

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