Openness, Human Development, and Fiscal Policies: Effectson Economic Growth and Speed of Adjustment

July 1, 1993

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Format: Chicago

Delano Villanueva. Openness, Human Development, and Fiscal Policies: Effectson Economic Growth and Speed of Adjustment, (USA: International Monetary Fund, 1993) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The model developed here postulates that learning through experience plays a critical role in raising labor productivity over time, with three major consequences. First, the steady-state growth rate (of output) becomes endogenous and is influenced by government policies. Second, the speed of adjustment to steady-state growth is faster, and enhanced learning further reduces adjustment time. Third, both steady-state growth and the optimal net rate of return to capital are higher than the sum of exogenous rates of technical change and population growth. Simulation results confirm the model’s faster speed of adjustment, while regression analysis explains a large part of divergent growth patterns across countries in terms of the extent of openness and human development and of the quality of fiscal policies.

Subject: Capital productivity, Government debt management, Income, Labor, Production growth

Keywords: Growth rate, Learning by doing, Rate of return, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1993/059
Stock No:

WPIEA0591993
ISBN:

9781451965780
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 41, No. 1, March 1994.

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