A Model of Adjustment and Growth: An Empirical Analysis

International Monetary Fund

No 1989/032, IMF Working Papers from International Monetary Fund

Abstract: This paper develops a model merging the monetary approach to the balance of payments and a neoclassical growth model into a unified framework in which inflation, growth, and the balance of payments are simultaneously determined. The empirical part of the paper presents estimates of the key parameters of the model for a sample of seven diverse developing countries and tests the validity of a subset of the theoretical assumptions. The estimated model is then used for a variety of comparative static exercises, including the effects of fiscal and monetary policy changes, and devaluation.

Keywords: WP; balance of payments; price level; production function; velocity of money; upper bound; balance of payments effect; money demand; savings rate; Demand for money; Production growth; Inflation; Trade balance; Private savings (search for similar items in EconPapers)
Pages: 42
Date: 1989-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1989/032

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