EXTENDING THE AUGMENTED SOLOW GROWTH MODEL TO EXPLAIN TRANSITIONAL ECONOMIES

John M. Polimeni, Raluca Ioana Iorgulescu and W. Scott Trees ()
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W. Scott Trees: Department of Economics, Siena College, 515 Road, Loudonville, NY 12211, United States of America

Journal for Economic Forecasting, 2007, vol. 4, issue 1, pages 65-76

Abstract: The development of countries in economic transition is often misunderstood. These countries are neither underdeveloped nor are they developed, they are somewhere in between. Therefore, macroeconomic models of transitional economies must include aspects of both underdeveloped and developed countries. Two such variables that should be included are institutions and learning-by-doing. Institutions that are established in the society are important because they can either hinder or accelerate economic growth. Just as important for transitional economies is learning-by-doing, as it takes time to learn how a new economic system works. This paper presents a macroeconomic model for transitional economies that extends the Augmented Solow Growth Model to incorporate learning-by-doing and institutions.

Keywords: Solow growth model; transitional economies; economic development (search for similar items in EconPapers)
JEL-codes: O11 P20 E60 (search for similar items in EconPapers)
Date: 2007
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