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has been cited by the following article:

• TITLE: An Inverted U-Shaped Relationship between Public Debt and Economic Growth under the Golden Rule of Public Finance

  AUTHORS: Mitsuru Ueshina, Tamotsu Nakamura

  KEYWORDS: Inverted U-Shape, Public Debt, Economic Growth, Golden Rule of Public Finance

  JOURNAL NAME: Theoretical Economics Letters, Vol.9 No.6, August 9, 2019

  ABSTRACT: Empirical evidence shows an inverted U-shaped relationship between public debt-to-GDP ratio and economic growth for many advanced economies. Using a simple endogenous growth model with public debt under the Golden Rule of Public Finance (GRPF), which allows the government to issue bonds only to finance public investment, this paper explains the relationship. Although Greiner [1] explains it in the similar model, he introduces a more restrictive assumption than GRPF that the amount of public investment must be always equal to that of newly issued bonds, i.e., public investment must be financed only by newly issued bonds. This paper shows that the assumption is not needed. In other words, the inverted U-shaped relationship emerges in a more realistic case when public investment is partly financed by other sources than government bonds such as taxes.