Capital Accumulation and Economic Growth in a Small Open Economy

Description

Economic growth is an issue of primary concern to policy makers in both developed and developing economies. As a consequence, growth theory has long occupied a central role in economics. In this book, renowned growth theorist Stephen J. Turnovsky investigates the process of economic growth in a small open economy, showing that it is sensitive to the productive structure of the economy. The book comprises three parts, beginning with models where the only intertemporally viable equilibrium is one in which the economy is always on its balanced growth path. Empirical evidence suggests relatively slow speeds of convergence so the second part of the book looks at several alternative ways in which transitional dynamics may be introduced. In the third and final part, the author applies the growth model to the issue of foreign aid, focusing specifically on whether aid should be untied or tied to the accumulation of public capital.

Stephen J. Turnovsky is Castor Professor of Economics, University of Washington. He is a fellow of the Econometric Society and a past president of the Society of Economic Dynamics and Control, of the International Economics and Finance Society, and of the Society for Computational Economics.

Review of the hardback: 'The literature on economic growth has produced a number of models to explain the determinants of the long-run rate of growth. Turnovsky provides an excellent survey of these models, with an emphasis on the implications of the various models for the long-run effects of fiscal policies in a small open economy. This book is an important contribution to the understanding of the dynamic effects of macroeconomic policy by one of the leaders in the field.' Eric Bond, Vanderbilt University Review of the hardback: 'All you need to know about the rigorous analysis of growth, labor supply, and capital accumulation in small open economies with plenty of policy-relevant results on engines of growth, productive government spending, and taxation. The discussion of foreign aid in two-sector models is especially relevant for developing economies.' Rick Van Der Ploeg, University of Oxford