Growth and the current account in a small open economy

Matt Benge, Graeme Wells

    Research output: Contribution to journalArticlepeer-review

    5 Citations (Scopus)

    Abstract

    The authors provide a framework with which to analyze growth in a small economy with perfect capital mobility. The framework provides a diagrammatic representation of steady states that differs in interesting and important ways from the usual closed-economy Solow-Swan diagram. The authors use the key diagrams to illustrate the effects of changes in parameters such as the saving rate and productivity growth on steady-state values of macroeconomic aggregates. They compare the steady-state results for the open economy with those obtained using the more familiar closed-economy model. They illustrate the possibility of endogenous income growth.

    Original languageEnglish
    Pages (from-to)152-165
    Number of pages14
    JournalJournal of Economic Education
    Volume33
    Issue number2
    DOIs
    Publication statusPublished - 2002

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