Economic Vulnerability And Economic Growth: Some Results From A Neo-Classical Growth Modelling Approach
This paper incorporates economic vulnerability, defined as the increased proneness of certain economies to downside risks, within a neo-classical economic growth model to seek an explanation to the observation that a number of vulnerable economies enjoy high per capita output levels. Steady state results indicate that the more vulnerable economy would tend to have a higher per capita capital stock and output but a lower per capita consumption level, as resources are allocated to counteract vulnerability. Dynamic modelling results indicate that vulnerability reduces the speed of convergence between economies at different states of development.
Volume (Year): 29 (2004)
Issue (Month): 2 (December)
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