Endogenous Growth, Convergence and Fiscal Policies in an Interdependent World

George Alogoskoufis and Frederick (Rick) van der Ploeg

Chapter 15 in Open-Economy Macroeconomics, 1993, pp 272-288 from Palgrave Macmillan

Abstract: Abstract Older vintages of growth theory such as Solow (1956) Swan (1956) or Cass, (1965) assume diminishing marginal productivity of capital and predict convergence of levels in output and capital, so that they are of little use in answering questions of development. ‘Poor’ countries have a lower capital stock and thus a higher marginal productivity of capital and a higher interest rate than ‘rich’ countries. Consequently, consumers in ‘poor’ countries find it more worthwhile to save and postpone consumption than those in ‘rich’ countries and thus ‘poor’ countries grow faster than ‘rich’ countries until they have caught up. These older vintages of growth theories are of little use in explaining persistent differences in long-run growth rates, since these are simply given by the sum of the exogenous rate of population growth and the exogenous rate of labour-augmenting technical progress.

Keywords: Capital Stock; Fiscal Policy; Real Interest Rate; Endogenous Growth; Private Consumption (search for similar items in EconPapers)
Date: 1993
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-349-12884-6_15

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349128846

DOI: 10.1007/978-1-349-12884-6_15

Access Statistics for this chapter

More chapters in International Economic Association Series from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().