Growth Diagnostics and a Multisector Ramsey Model: The Case of Brazil

Cristina Vinyes and Terry Roe

No 56502, Bulletins from University of Minnesota, Economic Development Center

Abstract: Disenchantment 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.

Keywords: International; Development (search for similar items in EconPapers)
Pages: 44
Date: 2010-01
New Economics Papers: this item is included in nep-dev and nep-fdg
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:umedbu:56502

DOI: 10.22004/ag.econ.56502

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