IMF Working Papers Policy Analasis and Assessment
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This paper examines effects of economic growth and speed of adjustment on openness, human development, and fiscal policies. The model developed in this paper postulates that learning through experience raises labor productivity 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 increases 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 the exogenous rates of technical change and population growth.

Abstract

This paper examines effects of economic growth and speed of adjustment on openness, human development, and fiscal policies. The model developed in this paper postulates that learning through experience raises labor productivity 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 increases 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 the exogenous rates of technical change and population growth.

Staff Papers draws on IMF Working Papers, which are research studies by members of the Fund’s staff. A list of Working Papers issued in 1993:4 follows.

“The Role of Financial Institutions in the Transition to a Market Economy,” by Hans J. Blommestein and Michael G. Spencer [93/75]

“Testing the Credibility of Belgium’s Exchange Rate Policy,” by Ioannis Halikias [93/76]

“Asset Price Inflation in the 1980s: A Flow of Funds Perspective,” by Monica Hargraves, Garry J. Schinasi, and Steven R. Weisbrod [93/77]

“A Framework for Assessing Fiscal Sustainability and External Viability, with an Application to India,” by Karen Parker and Steffen Kastner [93/78]

“Efficiency Wages and Labor Mobility in an Open Economy,” by Pierre-Richard Agénor and Julio A. Santaella [93/79]

“Government Finance in a Model of Currency Substitution,” by Anne Sibert and Lihong Liu [93/80]

“Supply-Side Economics in an Integrated World Economy,” by Enrique G. Mendoza and Linda L. Tesar [93/81]

“Devaluation and Competitiveness in a Small Open Economy: Ireland 1987–1993,” by Leonardo Bartolini [93/82]

“Expected Devaluation and Economic Fundamentals,” by Alun H. Thomas[93/83]

“International R&D Spillovers,” by David T. Coe and Elhanan Helpman [93/84]

“Japanese Banks and the Asset Price ‘Bubble’,” by Steven M. Fries [93/85]

“The Impact of Worldwide Military Spending Cuts on Developing Countries,”by Tamim Bayoumi, Daniel Hewitt, and Steven Symansky [93/86]

“Nonmonetary Instruments and Their Use During the Transition from a Centrally Planned to a Market Economy,” by Paul Hilbers [93/87]

“Financial Liberalization and the Information Content of Money in Indonesia, Korea, and the Philippines,” by A. Javier Hamann [93/88]

“Price Controls and Electoral Cycles,” by Pierre-Richard Agenor and Carlos M. Asilis [93/89]

“On Credible Disinflation,” by Jorge E. Roldos [93/90]

“Labor Market Aspects of Industrial Restructuring in Canada,” by Eswar Prasad [93/91]

“Recent U.S. Investment Incentives,” by Christopher M. Towe [93/92]

“U.S. Health Care Reform,” by Ellen M. Nedde [93/93]

“Endogeneity in Structural Unemployment Equations: The Case of Canada,” by Caroline Van Rijckeghem [93/94]

“The Integration of World Capital Markets,” by Morris Goldstein and Michael Mussa [93/95]

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