This paper extends the previous literature on multiple growth equilibria by constructing a multisectoral open economy small macro model. We consider the dynamics of international debt, physical capital accumulation and competitiveness, and show that there exist two distinct stable equilibria,...

Many governments have a long-run target of lowering budget deficits in the future through current deficit spending, relying on economic growth to deliver their policy objective. This paper shows that this is unattainable under bond finance, since there exists no stable equilibrium. However, it...