English, Article, Journal or magazine article edition: Education and Growth with Endogenous Debt Constraints David, DE LA CROIX

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Bookmark: http://trove.nla.gov.au/version/178420
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Education and Growth with Endogenous Debt Constraints
Author
  • David, DE LA CROIX
Physical Description
  • preprint
Notes
  • When future human capital cannot be alienated, households are allowed to borrow up to the point where it is in their own interest not to default. In such a framework, endogenous borrowing limits arise as the outcome of individual rationality constraint. In a model where education is the engine of growth, we show that endogenous borrowing constraints imply global indeterminacy. Comparing outcomes across the various equilibria we show that the relation between growth and yields is hump-shaped. Maximum growth can arise in an equilibrium with binding borrowing constraints, specially if the elasticity if human capital to education spending is large. Deepening financial markets promotes long-run growth in the case of a poverty trap, but not necessarily otherwise.
  • Financial depth; borrowing constraints; indeterminacy; incentive compatibility
  • RePEc:ctl:louvir:2004020
Language
  • English
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