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A model of adjustment and growth: An empirical analysis

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  • Reinhart, Carmen

Abstract

This paper develops a model merging the monetary approach to the balance of payments and a neoclassical growth model into a unified framework in which inflation, growth, and the balance of payments are simultaneously determined. The empirical part of the paper presents estimates of the key parameters of the model for a sample of seven diverse developing countries and tests the validity of a subset of the theoretical assumptions. The estimated model is then used for a variety of comparative static exercises, including the effects of f i s c a l and monetary policy changes, and devaluation.

Suggested Citation

  • Reinhart, Carmen, 1989. "A model of adjustment and growth: An empirical analysis," MPRA Paper 14101, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14101
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    References listed on IDEAS

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    1. International Monetary Fund, 1987. "Theoretical Aspects of the Design of Fund-Supported Adjustment Programs," IMF Occasional Papers 1987/007, International Monetary Fund.
    2. Mohsin S. Khan & Peter J. Montiel, 1989. "Growth-Oriented Adjustment Programs: A Conceptual Framework," IMF Staff Papers, Palgrave Macmillan, vol. 36(2), pages 279-306, June.
    3. Carmen M. Reinhart, 1990. "A Model of Adjustment and Growth: An Empirical Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 37(1), pages 168-182, March.
    4. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    5. Haque, Nadeem U & Montiel, Peter, 1989. "Consumption in Developing Countries: Tests for Liquidity Constraintsand Finite Horizons," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 408-415, August.
    6. Khan, Mohsin S. & Montiel, Peter & Haque, Nadeem U., 1990. "Adjustment with growth : Relating the analytical approaches of the IMF and the World Bank," Journal of Development Economics, Elsevier, vol. 32(1), pages 155-179, January.
    7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    8. Tyler, William G., 1981. "Growth and export expansion in developing countries : Some empirical evidence," Journal of Development Economics, Elsevier, vol. 9(1), pages 121-130, August.
    9. International Monetary Fund, 1989. "A Model of Adjustment and Growth: An Empirical Analysis," IMF Working Papers 1989/032, International Monetary Fund.
    10. Khan, Mohsin S. & Reinhart, Carmen M., 1990. "Private investment and economic growth in developing countries," World Development, Elsevier, vol. 18(1), pages 19-27, January.
    11. Nicola Rossi, 1988. "Government Spending, the Real Interest Rate, and the Behavior of Liquidity-Constrained Consumers in Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 35(1), pages 104-140, March.
    12. Fry, Maxwell J., 1986. "Terms-of-trade dynamics in Asia: An analysis of national saving and domestic investment responses to terms-of-trade changes in 14 Asian LDCs," Journal of International Money and Finance, Elsevier, vol. 5(1), pages 57-73, March.
    13. Sherman Robinson, 1971. "Sources of Growth in Less Developed Countries: A Cross-Section Study," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(3), pages 391-408.
    14. Khan, Mohsin S, 1987. "Macroeconomic Adjustment in Developing Countries: A Policy Perspective," The World Bank Research Observer, World Bank, vol. 2(1), pages 23-42, January.
    15. Mr. Malcolm D. Knight & Mr. Mohsin S. Khan, 1985. "Fund Supported Adjustment Programs and Economic Growth," IMF Occasional Papers 1985/009, International Monetary Fund.
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    Cited by:

    1. Carmen M. Reinhart, 1990. "A Model of Adjustment and Growth: An Empirical Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 37(1), pages 168-182, March.
    2. Sindzingre, Alice, 2021. "Truth vs. justification: Contrasting heterodox and mainstream thinking on development via the example of austerity in Africa," IPE Working Papers 155/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Mr. Jan Giehm Mikkelsen, 1998. "A Model for Financial Programming," IMF Working Papers 1998/080, International Monetary Fund.
    4. Akram, Q. Farooq, 2011. "Policy analysis in real time using IMF's monetary model," Economic Modelling, Elsevier, vol. 28(4), pages 1696-1709, July.
    5. Alice Nicole Sindzingre, 2021. "Truth vs justification: contrasting heterodox and mainstream thinking on development via the example of austerity in Africa," CEPN Working Papers hal-03139457, HAL.
    6. Tarp, Finn, 1994. "De makroøkonomiske reformer i teoretisk belysning [Macroeconomic Reforms in Theoretical Context]," MPRA Paper 64206, University Library of Munich, Germany.
    7. repec:bla:devpol:v:23:y:2005:i:3:p:299-312 is not listed on IDEAS
    8. Evia, José Luis, 1996. "Política Fiscal e Inversión Privada en Bolivia," Documentos de trabajo 6/1992, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    9. Alice Nicole Sindzingre, 2021. "Truth vs justification: contrasting heterodox and mainstream thinking on development via the example of austerity in Africa," Working Papers hal-03139457, HAL.

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    More about this item

    Keywords

    growth current account inflation IMF programs devaluation;

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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