Economic growth is an issue of primary concern to policy makers in both developed and developing economies. As a consequence, growth theory has long occupied a central role in economics. In this book, renowned growth theorist Stephen J. Turnovsky investigates the process of economic growth in a small open economy, showing that it is sensitive to the productive structure of the economy. The book comprises three parts, beginning with models where the only intertemporally viable equilibrium is one in which the economy is always on its balanced growth path. Empirical evidence suggests relatively slow speeds of convergence so the second part of the book looks at several alternative ways in which transitional dynamics may be introduced. In the third and final part, the author applies the growth model to the issue of foreign aid, focusing specifically on whether aid should be untied or tied to the accumulation of public capital.
• Written by one of the world's most respected economists • All models are presented with consistent notation and in a coherent manner, which makes the book easy for readers to follow • Serves as a useful reference for graduate students and researchers working in the area of growth theory and international macroeconomics
List of figures; List of tables; Preface; 1. Introduction and brief overview; Part I. Models of Balanced Growth: 2. Basic growth model with fixed labor supply; 3. Basic growth model with endogenous labor supply; Part II. Transitional Dynamics and Long-run Growth: 4. Transitional dynamics and endogenous growth in one-sector models; 5. Two-sector growth models; 6. Non-scale growth models; Part III. FOREIGN AID, CAPITAL ACCUMULATION and ECONOMIC GROWTH: 7. Basic model of foreign aid; 8. Foreign aid, capital accumulation, and economic growth: some extensions; References; Index.
Review of the hardback: 'The literature on economic growth has produced a number of models to explain the determinants of the long-run rate of growth. Turnovsky provides an excellent survey of these models, with an emphasis on the implications of the various models for the long-run effects of fiscal policies in a small open economy. This book is an important contribution to the understanding of the dynamic effects of macroeconomic policy by one of the leaders in the field.' Eric Bond, Vanderbilt University
Review of the hardback: 'All you need to know about the rigorous analysis of growth, labor supply, and capital accumulation in small open economies with plenty of policy-relevant results on engines of growth, productive government spending, and taxation. The discussion of foreign aid in two-sector models is especially relevant for developing economies.' Rick Van Der Ploeg, University of Oxford