This paper considers an endogenous growth model with public capital and government debt. In setting the level of public investment each period, the government is assumed to follow two fiscal rules that are commonly used in the growth literature: public investment is either equal to a constant...

We explore the links between credit expansion, inflation, and inflation expectations, and show that active public debt management can trigger a non-interest rate channel of credit expansion. This creates incentives for the government to use debt management for promoting non-debt management...