Interest Rate Rules And Transitional Dynamics In An Endogenously Growing Open Economy
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Growth in Open Economies
Author | : Sergio Rebelo |
Publisher | : World Bank Publications |
Total Pages | : 58 |
Release | : |
Genre | : |
ISBN | : |
Interest Rate Rules, Endogenous Cycles, and Chaotic Dynamics in Open Economies
Author | : Mr.Marco Airaudo |
Publisher | : International Monetary Fund |
Total Pages | : 68 |
Release | : 2012-05-01 |
Genre | : Business & Economics |
ISBN | : 1475546416 |
We present an extensive analysis of the consequences for global equilibrium determinacy in flexible-price open economies of implementing active interest rate rules, i.e., monetary rules where the nominal interest rate responds more than proportionally to inflation. We show that conditions under which these rules generate aggregate instability by inducing liquidity traps, endogenous cycles, and chaotic dynamics depend on specific characteristics of open economies. In particular, rules that respond to expected future inflation are more prone to induce endogenous cyclical and chaotic dynamics the more open the economy to trade.
Essays on Open Economies with Endogenous Growth
Author | : Thomas Osang |
Publisher | : |
Total Pages | : 248 |
Release | : 1994 |
Genre | : Economic development |
ISBN | : |
Dynamics, Economic Growth, and International Trade
Author | : Bjarne Sloth Jensen |
Publisher | : University of Michigan Press |
Total Pages | : 385 |
Release | : 2010-03-11 |
Genre | : Business & Economics |
ISBN | : 0472026410 |
While endogenous growth theory has claimed success in modeling various factors of growth and providing an analysis of sustainable economic growth, most of the growth models in published work are for closed economies. The omission of international trade, which is often regarded as the engine of growth, greatly reduces their usefulness. The theory of international trade, on the other hand, is characterized by models that are mainly static. While interest in the dynamics of trade has been growing, there is still little work in this area. The success of the newly industrialized economies that have adopted trade-oriented policies suggests how limited present trade theory is in explaining and analyzing the growth of these economies. The work collected here serves to bridge the "old" growth theory and "new" growth theory; merge growth and trade theory; suggest new analysis and techniques of economic growth; and provide analysis of new issues related to growth and trade. The first chapter surveys endogenous growth and international trade and critically reviews the endogenous growth theory with a unified framework, covering the work on both closed and open economies. Three chapters examine the dynamics of some basic trade models; two chapters focus on growth and trade with endogenous accumulation of human and public capital; two chapters on economic growth, technological progress, and international trade; and two chapters on growth and international factor movements. Contributors include Eric W. Bond, Theo S. Eicher, Rolf Färe, Oded Galor, Shawna Grosskopf, Bjarne S. Jensen, Pantelis Kalaitzidakis, Shoukang Lin, Ngo Van Long, Kazuo Nishimura, Koji Shimomura, Kathleen Trask, Stephen J. Turnovsky, Pham Hoang Van, Henry Wan, Jr., Chunyan Wang, and Kar-yiu Wong. Bjarne S. Jensen is Associate Professor of Economics, Copenhagen Business School. Kar-yiu Wong is Professor of Economics, University of Washington, Seattle.
International Trade, Distortions and Long-run Economic Growth
Author | : Chong-hwa Yi |
Publisher | : |
Total Pages | : 48 |
Release | : 1992 |
Genre | : Economic development |
ISBN | : |
Economic Growth and Environmental Policy
Author | : Frank Hettich |
Publisher | : Edward Elgar Publishing |
Total Pages | : 296 |
Release | : 2000 |
Genre | : Business & Economics |
ISBN | : |
Focusing on the effects of environmental policy in closed and open economies in the short, medium and long term, this book uses dynamic modelling to study the interactions between economic growth, environmental policy and tax reform.
Debt and Growth
Author | : Ramón López |
Publisher | : |
Total Pages | : 44 |
Release | : 2018 |
Genre | : |
ISBN | : |
We generalize endogenous growth models, which often assume a closed-economy, to allow for international borrowing and lending. We incorporate a prominent feature of global financial markets, that the marginal cost of borrowing facing a small open economy is dependent on the “country risk” as perceived by international lenders. This interest rate premium is determined by the ratio between debts and country assets that can be used for debt collateral. Consequently, the cost of credit is jointly influenced by international financial parameters and byendogenous country policies and growth patterns. To highlight the implications of integrating international financial considerations into an otherwise real growth model, we first use the simplest (and arguably, the most popular) one- factor growth model, the AK one, and assume that all real factors of production can be used as collateral. The model yields long-run conditions under which the country becomes a borrower in international markets, remains closed or accumulates financial wealth. The model highlights the special conditions corresponding to thesolution to an AK growth model, but the outcomes of the model are richer and perhaps more realistic than conventional endogenous growth solutions. However, extending the model to include another reproducible, non-collateral asset allows for transitional dynamics but does not change the basic insights derived using the simple one-factor model.
Economic Growth, second edition
Author | : Robert J. Barro |
Publisher | : MIT Press |
Total Pages | : 676 |
Release | : 2003-10-10 |
Genre | : Business & Economics |
ISBN | : 9780262025539 |
The long-awaited second edition of an important textbook on economic growth—a major revision incorporating the most recent work on the subject. This graduate level text on economic growth surveys neoclassical and more recent growth theories, stressing their empirical implications and the relation of theory to data and evidence. The authors have undertaken a major revision for the long-awaited second edition of this widely used text, the first modern textbook devoted to growth theory. The book has been expanded in many areas and incorporates the latest research. After an introductory discussion of economic growth, the book examines neoclassical growth theories, from Solow-Swan in the 1950s and Cass-Koopmans in the 1960s to more recent refinements; this is followed by a discussion of extensions to the model, with expanded treatment in this edition of heterogenity of households. The book then turns to endogenous growth theory, discussing, among other topics, models of endogenous technological progress (with an expanded discussion in this edition of the role of outside competition in the growth process), technological diffusion, and an endogenous determination of labor supply and population. The authors then explain the essentials of growth accounting and apply this framework to endogenous growth models. The final chapters cover empirical analysis of regions and empirical evidence on economic growth for a broad panel of countries from 1960 to 2000. The updated treatment of cross-country growth regressions for this edition uses the new Summers-Heston data set on world income distribution compiled through 2000.
A Dynamic Model of Economic Growth in a Small Tourism Driven Economy
Author | : Stefan Franz Schubert |
Publisher | : |
Total Pages | : 25 |
Release | : 2014 |
Genre | : |
ISBN | : |
The paper studies the dynamics of economic growth caused by an increase in the growth rate of tourism demand.We develop a simple dynamic model of a small open economy, which is completely specialized in the production of tourism services (island economy model), populated by a large number of intertemporally optimizing agents, deriving utility from consuming an imported good. Tourism services are produced by means of a simple AK technology by using imported capital, its accumulation associated with adjustment costs. Moreover, the economy can lend or borrow at the international financial markets at the given world interest rate. Adjustments in the relative price of tourism services ensure market clearance for tourism services.The long-run growth rate of the economy is tied to the growth rate in tourism demand. An increase in the latter increases thus the economy's long-run balanced growth rate. In contrast to the standard one-good small open economy endogenous growth model, where the economy is always on its balanced growth path, we show that there are transitional dynamics after an increase in the growth rate of tourism demand. In particular, the short-run growth rate of output rises gradually towards its higher long-run level, and the market price of tourism increases during transition. Thus, an increase in the growth of tourism demand, say, caused by higher economic growth abroad, leads to a boom in the small open economy and increasing terms of trade. Adjustments of the relative price of tourism services (i. e. the real exchange rate) can therefore not protect the economy from demand disturbances.