Munich Personal RePEc Archive

A model of adjustment and growth: An empirical analysis

Reinhart, Carmen (1989): A model of adjustment and growth: An empirical analysis. Published in: Macroeconomic Models for Adjustment in Developing Countries (1991): pp. 10-37.


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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 f i s c a l and monetary policy changes, and devaluation.

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