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Openness, Human Development, and Fiscal Policies

In: Economic Adjustment and Growth Theory and Practice

Author

Listed:
  • Delano S Villanueva
  • Roberto S Mariano
  • Diwa C Guinigundo
  • Abbas Mirakhor

Abstract

The basic neoclassical growth model developed by Solow (1956) and Swan (1956) has been the workhorse of growth theory for nearly four decades. Its simple structure consisting of a well-behaved neoclassical production function, investment-saving relation, and a labor growth function, is an elegant solution to the knife-edge problem posed by Harrod (1939) and Domar (1946). By allowing smooth factor substitution and wage-price flexibility, the capital/output ratio is made a monotonic function of the capital/labor ratio. The growth rate of the capital stock (the warranted rate) adjusts to the exogenously given growth rate of the labor force (the natural rate) to maintain full employment real output…

Suggested Citation

  • Delano S Villanueva & Roberto S Mariano & Diwa C Guinigundo & Abbas Mirakhor, 2023. "Openness, Human Development, and Fiscal Policies," World Scientific Book Chapters, in: Economic Adjustment and Growth Theory and Practice, chapter 6, pages 119-165, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811258787_0006
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    Citations

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    Cited by:

    1. Mr. Philip R. Gerson, 1998. "The Impact of Fiscal Policy Variables on Output Growth," IMF Working Papers 1998/001, International Monetary Fund.
    2. Robert Holzmann & Christian Thimann & Angela Petz, 1994. "Pressure to Adjust: Consequences for the OECD Countries from Reforms in Eastern Europe," International Trade 9403001, University Library of Munich, Germany.
    3. Holzmann, Robert, 1996. "Fiscal issues of shifting from unfunded to funded pension," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34300, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Delano S Villanueva & Roberto S Mariano & Diwa C Guinigundo & Abbas Mirakhor, 2023. "A Modified Neoclassical Growth Model with Endogenous Labor Participation," World Scientific Book Chapters, in: Economic Adjustment and Growth Theory and Practice, chapter 3, pages 44-64, World Scientific Publishing Co. Pte. Ltd..

    More about this item

    Keywords

    Adjustment and Growth; Testing Growth Models; Labor Participation; Human and Intellectual Capital; Finance and Growth; Adaptive Inflationary Expectations; Learning by Doing; Optimal Saving; Sustainable Foreign Debt; Stabilization and Structural Policies; Emerging Economy Case Study;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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