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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.
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Capital Accumulation and Economic Growth in a Small Open Economy 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, 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.
s t e p h e n j. t ur no v s k y holds the Castor Chair of Economics at the University of Washington. He is a fellow of the Econometric Society and a past president of the Society of Economic Dynamics and Control, and of the Society for Computational Economics. He is a former editor of the Journal of Economic Dynamics and Control and has served on or is currently serving on the editorial boards of several major journals. He is the author of several books, including Macroeconomic Analysis and Stabilization Policy (Cambridge University Press, 1977) and Methods of Macroeconomic Dynamics (2000).
The CICSE Lectures in Growth and Development Series editor Neri Salvadori, University of Pisa
The CICSE lecture series is a biannual lecture series in which leading economists present new findings in the theory and empirics of economic growth and development. The series is sponsored by the Centro Interuniversitario per lo studio sulla Crescita e lo Sviluppo Economico (CICSE), a centre devoted to the analysis of economic growth and development supported by seven Italian universities. For more details about CICSE see their website at http://cicse.ec.unipi.it/.
Capital Accumulation and Economic Growth in a Small Open Economy STEPHEN J. TURNOVSKY
CAMBRIDGE UNIVERSITY PRESS
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi, Dubai, Tokyo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521764759 © CICSE 2009 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print f