An Empirical Comparison of Interest and Growth Rates

Julia, Knolle (2014): An Empirical Comparison of Interest and Growth Rates.

Abstract

This paper investigates methods of assessing dynamic efficiency, points out their shortcomings and develops a new criterion of determining whether or not an economy accumulates too much capital. This criterion is then applied to the OECD countries as well as China. The analysis sheds a new light on recent proposals of raising public debt levels during a time of low interest rates.

• Item Type: MPRA Paper
• Language: English
• Keywords: Overaccumulation; dynamic efficiency; public debt; ponzi games; zero lower bound; WACC.
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E43 - Interest Rates: Determination, Term Structure, and Effects; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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