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Extending The Augmented Solow Growth Model To Explain Transitional Economies

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Author Info

  • Polimeni, John M.

    ()
    (Department of Humanities and Social Sciences, Albany College of Pharmacy, 106 New Scotland Avenue, Albany, NY 12208, United States of America)

  • Iorgulescu Polimeni, Raluca

    ()
    (Department of Economics, Siena College, 515 Loudon Road, Loudonville, NY 12211, United States of America)

  • Trees, W. Scott

    ()
    (Department of Economics, Siena College, 515 Road, Loudonville, NY 12211, United States of America)

Abstract

The development of countries in economic transition is often misunderstood. These countries are neither underdeveloped nor are they developed, they are somewhere in between. Therefore, macroeconomic models of transitional economies must include aspects of both underdeveloped and developed countries. Two such variables that should be included are institutions and learning-by-doing. Institutions that are established in the society are important because they can either hinder or accelerate economic growth. Just as important for transitional economies is learning-by-doing, as it takes time to learn how a new economic system works. This paper presents a macroeconomic model for transitional economies that extends the Augmented Solow Growth Model to incorporate learning-by-doing and institutions.

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Bibliographic Info

Article provided by Institute for Economic Forecasting in its journal Romanian Journal for Economic Forecasting.

Volume (Year): 4 (2007)
Issue (Month): 1 (March)
Pages: 65-76

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Handle: RePEc:rjr:romjef:v:4:y:2007:i:1:p:65-76

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Keywords: Solow growth model; transitional economies; economic development;

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