Govt Borrowing Negative at Steady State?

General DSGE Modeling
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  1. Ok, yes. I see. It is indeed that case that if the growth adjusted real interest rate R/(pi*g) is smaller than 1, then you can only have a steady state if beta is bigger than 1. But then again, there is the question of beta being growth adjusted.
  2. But the growth adjustment is only relevant if you are not having log utility. With log utility, there is no adjustment for beta. Regarding a reference, Romer’s textbook covers this in continuous time in section 2.2. I have just sent you my own lecture slides where this relationship is derived.