Growth Diagnostics and a Multisector Ramsey Model: The Case of Brazil
AbstractDisenchantment with the Washington Consensus has led to an emphasis on growth diagnostics. In the case of Brazil, the literature suggests three main factors impeding growth: low domestic savings, a shortage of skilled workers, and lack of investment in the country’s transportation infrastructure. The unique contribution of this study is to show the inter-temporal implications of relaxing these constraints. We fit a multi-sector Ramsey model to Brazilian data, validate its fit to times data, and provide empirical insights into the economy’s structural transformation to long-run equilibrium. Then, the sensitivity of these results to relaxing each of these three constraints is investigated in a manner that yields the same long-run level of well- being. Analytical concepts adapted from static trade theory are used to provide a detailed explanation of how the economy responds in transition growth to the relaxation of these impediments. Addressing these factors clearly benefits the economy, but they do not launch the economy on a substantially higher growth path.
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Bibliographic InfoPaper provided by University of Minnesota, Economic Development Center in its series Bulletins with number 56502.
Date of creation: Jan 2010
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Economic growth; Ramsey; Growth diagnostics; International Development; O11; O41; O54; D58;
Find related papers by JEL classification:
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-05 (All new papers)
- NEP-DEV-2010-02-05 (Development)
- NEP-FDG-2010-02-05 (Financial Development & Growth)
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