Cover IMF Working Papers
Openness, Human Development, and Fiscal Policies: Effectson Economic Growth and Speed of Adjustment
Author:
Delano Villanuevanull

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Series:
IMF Working Papers
Volume/Issue:
Volume 1993: Issue 059
Language:
English
Publication Date:
01 Jul 1993
DOI:
https://doi.org/10.5089/9781451965780.001
ISBN:
9781451965780
ISSN:
1018-5941
Pages:
36
Keywords:
WP; growth rate; rate of return; learning by doing
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 1993: Issue 059