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Global effects of national fiscal policy in a multi-country growth model with capital accumulation

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  • Wei-Bin Zhang

Abstract

The purpose of this study is to examine dynamic interactions of economic growth, trade patterns and fiscal policies among multiple countries. Basing on the two traditional models in neoclassical growth theory - Uzawa's two-sector growth model and the one-sector neoclassical trade model with capital, this paper proposes a multi-country growth model with public sector and capital accumulation. We show that the motion of the world economy with J-countries is described by a J-dimensional differential equations system. We identify the existence of equilibrium of the global economy and demonstrate effects of changes in some of the fiscal policies. We show that a change in the same policy parameter in the same direction in different economies may have opposite effects on the global economy and the domestic and foreign economies.

Suggested Citation

  • Wei-Bin Zhang, 2012. "Global effects of national fiscal policy in a multi-country growth model with capital accumulation," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 9(1), pages 42-58.
    • Handle: RePEc:ids:ijbglo:v:9:y:2012:i:1:p:42-58
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    Citations

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    Cited by:

    1. Wei-Bin Zhang, 2017. "Business Cycles with Spirit of Capitalism and Conspicuous Consumption in a Multi-Country Growth Model," International Business Research, Canadian Center of Science and Education, vol. 10(8), pages 58-71, August.
    2. Wei-Bin ZHANG, 2018. "Corruption, governments’ debts, trade, and global growth," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(615), S), pages 27-50, Summer.
    3. Zhang Wei-Bin, 2015. "A Synthesis of the Heckscher-Ohlin and Oniki-Uzawa Trade Models with Heterogeneous Tastes, Different Technologies, and Endogenous Wealth," Scientific Annals of Economics and Business, Sciendo, vol. 62(3), pages 391-410, November.

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