Money, national debt, and economic growth (Q794896)

This paper develops a dynamic model which allows for government spending, taxation, and the endogeneity of the money supply. It is known that the steady state in the neoclassical growth model with two assets (money and physical assets) is a saddle-point under myopic perfect foresight. The authors conclude that this instability result can be reversed introducing a third asset (securities). They show that the dynamical properties of their model are quite ''robust'' with respect to changes in specification of fiscal and monetary policies.