A model of adjustment and growth: An empirical analysis

Reinhart, Carmen (1991): A model of adjustment and growth: An empirical analysis. Published in: Macroeconomic Models for Adjustment in Developing Countries : pp. 10-37.

Abstract

the simplicity that makes a model more tractable from an operational standpoint may have several drawbacks as a result of the necessarily restrictive assumptions it employs. This paper assesses the empirically the trade-off between its simplifying assumptions and its ability to fit reality. This trade-off can be assessed by applying the model to a variety of countries. For each country, the following questions are asked: (1) Are the key parameters of the model stable? (2) How sensitive are the policy multipliers to these parameter estimates-that is, how robust are the policy implications? and (3) Are some target variables more vulnerable to forecast errors than others? This paper examines these three questions for a diverse sample of seven capital importing developing countries and attempts to reach some conclusions about the usefulness of the model to help in designing policy.

• Item Type: MPRA Paper
• Language: English
• Keywords: IMF program money demand growth balance of payments
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy; F - International Economics > F2 - International Factor Movements and International Business; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates

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