This paper studies how the method of government debt financing affects the macroeconomic performance of the transforming Chinese economy. The investigation is conducted within the context of an endogenous growth model that incorporates the major institutional features of the Chinese economy. Using this framework, we evaluate the effects on the growth rate of output and inflation if the Chinese ...

The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper examines different explanations—initial conditions, openness to trade and FDI, and institutions—of the Mauritian growth experience...

Emerging markets exhibit (1) high expected returns to capital and (2) large exposures to movements in US returns, measured by the ‘beta’ of the returns to the asset on the returns to its US counterpart. We document these facts in detail for two asset classes stock market returns and the return to aggregate capital and we provide further evidence from a third class sovereign bonds. We use a seri...

Entry costs vary dramatically across countries. To assess their impact we construct a model with endogenous entry and operation decisions by …rms and calibrate it to match the U.S. distribution of …rms by size. Higher entry costs lead to greater misallocation of productive factors and lower TFP and output. In the model, countries in the lowest decile of the entry costs distribution have 1.35 to...

Immigration, Human Capital Formation and Endogenous Economic Growth* Census data from international sources covering 77% of the world’s migrant population indicate that the skill composition of migrants in major destination countries, including the US, has been rising over the last four decades. Moreover, the population share of skilled migrants has been approaching or exceeding that of skilled...

Analysis of adjustment loans often overlooks their repetition to the same country. Repetition changes the nature of the selection problem. None of the top 20 recipients of repeated adjustment lending over 1980–99 were able to achieve reasonable growth and contain all policy distortions. About half of the adjustment loan recipients show severe macroeconomic distortions regardless of cumulative a...

This paper analyzes post–1991 sectoral US and German productivity growth and finds supporting evidence that productivity growth accelerations were largely spurred by interaction of ICT investment and high-skill intensity. While the US experienced dramatic increases in productivity growth in High-Skill-Intensive goods-producing and services sectors, German counterparts substantially lagged behin...

An Empirical Model of Growth Through Product Innovation Productivity dispersion across firms is large and persistent, and worker reallocation among firms is an important source of productivity growth. The purpose of the paper is to estimate the structure of an equilibrium model of growth through innovation that explains these facts. The model is a modified version of the Schumpeterian theory of...

In this paper we show that bank competition has an intrinsically ambiguous impact on capital accumulation. We further show that it is also responsible for the emergence of development traps in economies that otherwise would be characterized by unique equilibria. These results explain the conflicting evidence emerging from the recent empirical studies of the effects of bank competition on econom...