Economic Adjustment and Growth: Theory and Practice

Contents
Foreword
Acknowledgments
About the Authors
Introduction and Overview
	References
1. The Basic Neoclassical Growth Model: A Review
	References
2. Testing the Neoclassical Theory of Economic Growth: A Panel Data Approach
	2.1 The Model
		2.1.1 The Steady State
		2.1.2 Dynamics Around the Steady State
	2.2 Panel Data Estimation
	2.3 Data and Results
	2.4 Concluding Remarks
	Appendix 2.A: Data Sources, Definitions, and the Sample of Countries
	References
3. A Modified Neoclassical Growth Model with Endogenous Labor Participation
	3.1 Introduction
	3.2 The Modified Growth Model
		3.2.1 Discussion
		3.2.2 Reduced Model
	3.3 Comparative Dynamics
		3.3.1 The Growth Effects of a Higher Saving Rate
		3.3.2 The Growth Effects of an Increase in Technical Change
		3.3.3 The Growth Effects of a Decline in Labor Participation
	3.4 Related Issues
	3.5 Conclusion
	References
4. Capital and Growth
	4.1 Introduction
	4.2 A Neoclassical Model of Capital and Growth
		4.2.1 Reduced Model
		4.2.2 Stability of Equilibrium and Growth Dynamics
		4.2.3 Comparative Dynamics
	4.3 Optimal Saving Rate
	4.4 Summary and Conclusion
	Appendix 4.A: Derivation of the Key Innovation of DV Model
	References
5. Finance and Endogenous Growth
	5.1 Introduction
	5.2 The Growth Model
	5.3 Reduced Model
	5.4 Short-Run and Long-Run Growth Effects of a Decline in Financial Flows
	5.5 Other Comparative Dynamics
	5.6 Conclusion
	References
6. Openness, Human Development, and Fiscal Policies
	6.1 Endogenous Growth
		6.1.1 Reduced Model
		6.1.2 Stability
		6.1.3 Equilibrium Capital Intensity and Growth
		6.1.4 Comparative Dynamics
			6.1.4.1 Effects of a Higher Saving Rate
			6.1.4.2 Effects of Openness, Human Development Spending, and Technical Change
			6.1.4.3 Effects of Fiscal Deficits and Population Growth
	6.2 Optimal Long-Run Growth
	6.3 The Speed of Adjustment Toward Equilibrium
		6.3.1 Analytical Approach
		6.3.2 Simulation
		6.3.3 Empirical Approach
	6.4 Summary and Conclusions
	Appendix 6.A: Data Used in the Study
		List of Countries
	Appendix 6.B23: The Endogenous Growth Model in a Ramsey Framework
		6.B.1 The Model
		6.B.2 The Reduced Model
		6.B.3 Optimal Saving Rate
		6.B.4 The Speed of Adjustment to Equilibrium
		6.B.5 Conclusion
		References
7. Does Monetary Policy Matter for Long-Run Growth?
	7.1 Introduction
	7.2 The Modified Model
	7.3 The Effects of Disinflation
	7.4 Optimal Monetary Policy and Optimal Long-Run Growth
	7.5 The Speed of Adjustment to Long-Run Equilibrium
	7.6 Summary and Conclusions
	Appendix 7.A: The Reduced Model and Stability Analysis
	References
8. Outward-Oriented Trade Policies and Economic Growth
	8.1 Introduction
	8.2 The Growth Model
		8.2.1 The Standard vs. Modified Models: An Overview
		8.2.2 A Two-Sector Modified Model
			8.2.2.1 Equilibrium Behavior
			8.2.2.2 The Dynamic Effects of Exports on Economic Growth
			8.2.2.3 Some Extensions
	8.3 Optimal Saving
	8.4 Summary and Conclusions
	References
9. External Debt, Adjustment, and Growth
	9.1 Introduction
	9.2 The Formal Framework
		9.2.1 Brief Survey of the Literature
		9.2.2 The Extended Model
		9.2.3 The Reduced Model
		9.2.4 Restrictions on External Financing
		9.2.5 Optimal Growth
	9.3 Application to the Philippines
	9.4 Implications for Fiscal Policy and External Debt Management
	9.5 Summary and Conclusions
	Appendix 9.A: Stability Analysis
	Appendix 9.B: Data
		9.B.1 Definitions
		9.B.2 Data Sources
		9.B.3 Sample Period
		9.B.4 Software Used
	References
10. Optimal Saving and Sustainable Foreign Debt
	10.1 Introduction
	10.2 A Brief Survey of the Literature
	10.3 The VM2 Model
	10.4 Comparative Dynamics
	10.5 Optimal Saving and Sustainable Foreign Debt
	10.6 Concluding Remarks
	References
11. Economic Adjustment and Growth: A Summing Up
	References
12. Stabilization Policies and Structural Reforms: The Philippine Case
	12.1 Introduction
	12.2 Structural Reforms in the Philippines and the Role of the IMF
		12.2.1 Protectionism in the 1950s to 1980s
		12.2.2 Liberalization in the 1990s to Present: The Role of the IMF3
	12.3 The Impact of Reforms on the Philippine Economy
		12.3.1 Solid Macroeconomic Fundamentals
		12.3.2 Automatic Stabilizer
		12.3.3 Credit Rating Upgrades
	12.4 The Pandemic and Policy Lessons
		12.4.1 Managing Elevated Level of External Debt
		12.4.2 Maintaining Monetary and Fiscal Spaces
		12.4.3 Adopting Investment-Led Growth Strategy
	12.5 Conclusion
	References
Index