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- W2166916615 abstract "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 of 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. On the methodological side, our approach stresses the importance of studying borrowing limits in general equilibrium, not only in small open economies." @default.
- W2166916615 created "2016-06-24" @default.
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- W2166916615 date "2006-10-10" @default.
- W2166916615 modified "2023-10-13" @default.
- W2166916615 title "Education and growth with endogenous debt constraints" @default.
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- W2166916615 doi "https://doi.org/10.1007/s00199-006-0159-6" @default.
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