OPTIMAL INVESTMENT, EDUCATION, AND CONSUMPTION UNDER DEMOGRAPHIC CHANGES FOR A SMALL-OPEN ECONOMY

2009 ◽  
Vol 54 (01) ◽  
pp. 41-59 ◽  
Author(s):  
HOAN XUAN PHAM
Keyword(s):  
Open Economy ◽  
Optimal Path ◽  
Small Open Economy ◽  
Physical Capital ◽  
Optimal Investment ◽  
Current Time ◽  
Labor Ratio ◽  
Capital Labor Ratio ◽  
Current Consumption ◽  
Vintage Model

It is shown, using a vintage model of education which is developed in this paper, that given the assumptions of the model, the optimal path of investment in education is to keep the level of investment per student constant and the optimal path of investment in physical capital is to keep the capital-labor ratio constant over time. The pressure to reduce current consumption caused by population ageing is partly mitigated by the fact that a younger population, in the current time, is relatively more efficient in producing utility than an older one, in the future.

scholarly journals A cross-country non parametric estimation of the returns to factors of production and the elasticity of scale

Nova Economia ◽  
2007 ◽  
Vol 17 (1) ◽  
pp. 95-126 ◽  
Author(s):  
Adalmir Marquetti
Keyword(s):  
Human Capital ◽  
Imperfect Competition ◽  
Physical Capital ◽  
Parametric Estimation ◽  
Local Regression ◽  
Wage Share ◽  
Labor Ratio ◽  
Output Elasticity ◽  
Capital Labor Ratio ◽  
Constant Returns To Scale

This paper employs local regression to estimate the output elasticity with respect to labor, human capital, physical capital and the elasticity of scale for 90 countries in 1985 and 1995. The results support the hypotheses of constant returns to scale to factors and decreasing returns to accumulable factors. The low capital-labor ratio countries have important differences in factor elasticities in relation to other countries. The augmentation of the production function by human capital did not reduce the elasticity of physical capital as suggested by Mankiw, Romer and Weil (1992). Moreover, it is investigated if the factors shares are really equal to their output elasticity. The wage share raises with the capital labor ratio and the sum of the output elasticity of labor and human capital is below the wage share for high capital labor ratio countries, happening the inverse for low capital labor ratio countries. It indicates the presence of externalities, or imperfect competition or that the marginal theory of distribution is inaccurate.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

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