GDP-linked bonds and economic growth

Description: We analyze the implications of introducing GDP-linked bonds for economic growth. First, we model a stochastically growing small open economy. The government borrows from the international financial market, collects tax revenue, and provides a public infrastructure good. Sovereign debt may be both conventional and indexed to GDP. Second, we calibrate the model for a developing country. The introduction of GDP-linked bonds increases the optimal debt-to-GDP ratio, public-to-private capital ratio, and tax rate. It also exerts a small negative effect on the mean GDP growth rate as well as a small positive welfare impact. © 2023 Elsevier Ltd. All rights reserved.

Global identifier:

Doi(
    "10.60810/openumwelt-1899",
)

Origin: /Bund/UBA/openUMWELT

Tags: Wirtschaftswachstum ? Steuer ? Entwicklungsland ? Finanzmarkt ?

License: other-closed

Language: Englisch/English

Issued: 2023-01-01

Time ranges: 2023-01-01 - 2023-01-01

Status

Aktiv

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