Growth in a Small Open Economy
This paper provides a framework with which to analyse growth in a small economy with perfect capital mobility. It provides a diagrammatic representation of steady states which differs in interesting and important ways from the usual closed-economy Solow-Swan diagram. The paper also analyses model dynamics in response to shocks which perturb the steady state and it is shown that, by contrast to the closed-economy models which underpin much of the cross-section empirical work on income convergence, changes in the saving rate increase both the steady-state level of income and the half-life of income adjustment.
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|Date of creation:||1998|
|Date of revision:|
|Contact details of provider:|| Postal: THE AUSTRALIAN NATIONAL UNIVERSITY, DEPARTMENT OF ECONOMICS, RESEARCH SCHOOL of PACIFIC STUDIES, RESEARCH SCHOOL OF SOCIAL SCIENCES, G.P.O. 4, CANBERRA ACT 2601 AUSTRALIA..O. BOX 4 CANBERRA 2601 AUSTRALIA.|
Web page: http://economics.anu.edu.au/economics.htm
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