A semi-endogenous growth model with public factors, imported capital goods, and limited export demand for developing countries

Jan Simon Hallonsten, Thomas H. W. Ziesemer*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We build a semi-endogenous growth model for developing countries with non-rivalrous public factors, imported capital goods, and an export demand function. The model exhibits the three-way interaction between public and private investment and trade shown recently in the empirical literature. A parameter for government-investment inefficiency has transitional growth effects distorting between public investment and private capital, consumption, and exports, the latter biasing the terms of trade. Our analysis of a vector error-correction model (VECM) for Trinidad &Tobago shows that additional expenditure for public investment increases output less than taxes decrease per capita consumption and therefore is sub-optimal there. Both temporary and permanent shocks on public investment have level effects supporting semi-endogenous growth modeling and demonstrate that the VECM effects are in line with the logic of the theoretical model; terms of trade are endogenous.
Original languageEnglish
Pages (from-to)380-402
Number of pages23
JournalJournal of Applied Economics
Volume22
Issue number1
DOIs
Publication statusPublished - 2019

Keywords

  • Semi-endogenous growth
  • open economy
  • public investment
  • human capital
  • VECM
  • INFRASTRUCTURE INVESTMENT
  • EXPENDITURES
  • INSTITUTIONS
  • EDUCATION
  • POVERTY
  • BRAZIL
  • TRADE

Cite this

@article{f128defeda6c475692afceca0150acbb,
title = "A semi-endogenous growth model with public factors, imported capital goods, and limited export demand for developing countries",
abstract = "We build a semi-endogenous growth model for developing countries with non-rivalrous public factors, imported capital goods, and an export demand function. The model exhibits the three-way interaction between public and private investment and trade shown recently in the empirical literature. A parameter for government-investment inefficiency has transitional growth effects distorting between public investment and private capital, consumption, and exports, the latter biasing the terms of trade. Our analysis of a vector error-correction model (VECM) for Trinidad &Tobago shows that additional expenditure for public investment increases output less than taxes decrease per capita consumption and therefore is sub-optimal there. Both temporary and permanent shocks on public investment have level effects supporting semi-endogenous growth modeling and demonstrate that the VECM effects are in line with the logic of the theoretical model; terms of trade are endogenous.",
keywords = "Semi-endogenous growth, open economy, public investment, human capital, VECM, INFRASTRUCTURE INVESTMENT, EXPENDITURES, INSTITUTIONS, EDUCATION, POVERTY, BRAZIL, TRADE",
author = "Hallonsten, {Jan Simon} and Ziesemer, {Thomas H. W.}",
note = "Open Access: Open Data Source: World Development Indicators online open",
year = "2019",
doi = "10.1080/15140326.2019.1627726",
language = "English",
volume = "22",
pages = "380--402",
journal = "Journal of Applied Economics",
issn = "1514-0326",
publisher = "Routledge/Taylor & Francis Group",
number = "1",

}

A semi-endogenous growth model with public factors, imported capital goods, and limited export demand for developing countries. / Hallonsten, Jan Simon; Ziesemer, Thomas H. W.

In: Journal of Applied Economics, Vol. 22, No. 1, 2019, p. 380-402.

Research output: Contribution to journalArticleAcademicpeer-review

TY - JOUR

T1 - A semi-endogenous growth model with public factors, imported capital goods, and limited export demand for developing countries

AU - Hallonsten, Jan Simon

AU - Ziesemer, Thomas H. W.

N1 - Open Access: Open Data Source: World Development Indicators online open

PY - 2019

Y1 - 2019

N2 - We build a semi-endogenous growth model for developing countries with non-rivalrous public factors, imported capital goods, and an export demand function. The model exhibits the three-way interaction between public and private investment and trade shown recently in the empirical literature. A parameter for government-investment inefficiency has transitional growth effects distorting between public investment and private capital, consumption, and exports, the latter biasing the terms of trade. Our analysis of a vector error-correction model (VECM) for Trinidad &Tobago shows that additional expenditure for public investment increases output less than taxes decrease per capita consumption and therefore is sub-optimal there. Both temporary and permanent shocks on public investment have level effects supporting semi-endogenous growth modeling and demonstrate that the VECM effects are in line with the logic of the theoretical model; terms of trade are endogenous.

AB - We build a semi-endogenous growth model for developing countries with non-rivalrous public factors, imported capital goods, and an export demand function. The model exhibits the three-way interaction between public and private investment and trade shown recently in the empirical literature. A parameter for government-investment inefficiency has transitional growth effects distorting between public investment and private capital, consumption, and exports, the latter biasing the terms of trade. Our analysis of a vector error-correction model (VECM) for Trinidad &Tobago shows that additional expenditure for public investment increases output less than taxes decrease per capita consumption and therefore is sub-optimal there. Both temporary and permanent shocks on public investment have level effects supporting semi-endogenous growth modeling and demonstrate that the VECM effects are in line with the logic of the theoretical model; terms of trade are endogenous.

KW - Semi-endogenous growth

KW - open economy

KW - public investment

KW - human capital

KW - VECM

KW - INFRASTRUCTURE INVESTMENT

KW - EXPENDITURES

KW - INSTITUTIONS

KW - EDUCATION

KW - POVERTY

KW - BRAZIL

KW - TRADE

U2 - 10.1080/15140326.2019.1627726

DO - 10.1080/15140326.2019.1627726

M3 - Article

VL - 22

SP - 380

EP - 402

JO - Journal of Applied Economics

JF - Journal of Applied Economics

SN - 1514-0326

IS - 1

ER -