Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/233266 
Year of Publication: 
2009
Series/Report no.: 
Discussion paper No. 50
Publisher: 
Aboa Centre for Economics (ACE), Turku
Abstract: 
The literature on growth theory is rich with models attempting to explain growth differences among countries. Several variables have been proposed many of which were found to be positively related to growth. However, a major problem with these models is that the factors explaining growth are endogenously determined by their environment so that a slow-growing or a poor country will find itself helpless because all the crucial variables it has `inherited' are either deficient or inexistent. We propose policyoriented model that empowers (poor or slow-growing) countries in the sense that they can use economic policies to achieve high growth and eliminate the gap of unused productive capacity of society. We demonstrate that such objectives are possible by manipulating some key control variables, namely the rate of interest and the net government spending.
Subjects: 
growth
maximization
fiscal policy
interest rates
deficit
money
JEL: 
O11
O23
H2
H3
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.