We construct an endogenous growth model with productive public capital and government debt, in which government debt is gradually adjusted to the target level. We examine how the governmentfs debt reductions affect the transitional dynamics and welfare of the economy. We show that fiscal...

We construct an endogenous growth model with productive public capital and government debts where government debts are gradually adjusted to target level. We examine how debt-reductions of the government affect the transitional dynamics and welfare of the economy. Fiscal consolidation has...

We construct an endogenous growth model with productive public capital and government debt when government debt is adjusted to the target level. We examine how reducing public debt in an economy with a large public debt affects the transition of the economy and welfare. We find that the...