Cover -- Half-title -- Series-title -- Title -- Copyright -- Contents -- Figures -- Tables -- Preface -- 1 Introduction and brief overview -- 1.1 Some background -- 1.2 Scope of this book -- PART ONE: Models of balanced growth -- 2 Basic growth model with fixed labor supply -- 2.1 A canonical model of a small open economy -- 2.2 The endogenous growth model -- 2.2.1 Inelastic labor supply -- 2.3 Equilibrium in one-good model -- 2.3.1 Taxes and growth -- 2.3.2 Taxes and welfare -- 2.3.3 Wasted tax revenues -- 2.4 Productive government expenditure -- 2.4.1 The Barro model -- 2.4.2 Optimal fiscal policy -- 2.5 Two immediate generalizations -- 2.5.1 More general production function -- 2.5.2 More general utility specification -- 3 Basic growth model with endogenous labor supply -- 3.1 Introduction -- 3.2 The analytical framework: centrally planned economy -- 3.2.1 Macroeconomic equilibrium -- 3.2.2 Comparison with two models -- Small open economy fixed-employment AK model -- Closed economy endogenous labor supply model -- 3.2.3 Optimal government expenditure -- 3.3 Decentralized economy -- 3.3.1 Macroeconomic equilibrium -- 3.4 Fiscal shocks in the decentralized economy -- 3.4.1 Tax on capital income -- 3.4.2 Increase in government expenditure -- 3.4.3 Tax on interest income -- 3.4.4 Taxes on wages and consumption -- 3.5 Optimal fiscal policy -- 3.6 Conclusions -- PART TWO: Transitional dynamics and long-run growth -- 4 Transitional dynamics and endogenous growth in one-sector models -- 4.1 Upward-sloping supply curve of debt -- 4.1.1 Steady-state equilibrium and long-run adjustments -- 4.1.2 Transitional dynamics -- 4.1.3 Centrally planned economy -- 4.1.4 Replication of first-best optimum steady state -- 4.1.5 Replication of first-best optimum transition path -- 4.2 Comparison with basic model -- 4.3 Public and private capital.

4.3.1 The analytical framework -- 4.3.2 Equilibrium growth -- 4.3.3 Dynamics of production -- 4.3.4 Equilibrium dynamics: current account -- 4.3.5 Steady-state fiscal effects -- 4.3.6 Transitional dynamics -- 4.3.7 Optimal fiscal policy -- 4.4 Role of public capital: conclusions -- 5 Two-sector growth models -- 5.1 Introduction -- 5.1.1 The dependent economy model: a brief background -- 5.2 The model -- 5.3 Determination of macroeconomic equilibrium -- 5.3.1 Static allocation conditions -- 5.3.2 Price dynamics -- 5.3.3 Asset dynamics -- 5.4 Structural changes -- 5.4.1 Increase in rate of time preference -- 5.4.2 Increase in productivity -- 5.4.3 Foreign price shocks -- 5.5 Transitional dynamics -- 5.6 Conclusions -- 6 Non-scale growth models -- 6.1 Introduction -- 6.2 Small open economy -- 6.3 Aggregate dynamics -- 6.3.1 Consumption dynamics -- 6.3.2 Capital and the price of capital -- 6.3.3 Accumulation of foreign debt -- 6.4 Upward-sloping supply curve of debt -- 6.4.1 Macrodynamic equilibrium -- 6.4.2 Transitional dynamics -- 6.5 Elastic labor supply -- 6.5.1 Macrodynamic equilibrium -- 6.6 Conclusions -- Appendix -- PART THREE: Foreign aid, capital accumulation, and economic growth -- 7 Basic model of foreign aid -- 7.1 Introduction -- 7.2 The analytical framework -- 7.2.1 Private sector -- 7.2.2 Public capital, fiscal transfers, and national debt -- 7.2.3 Macroeconomic equilibrium -- 7.2.4 Steady-state equilibrium -- 7.2.5 Equilibrium dynamics -- 7.3 Long-run effects of transfers and fiscal shocks -- 7.4 Optimal responses -- 7.4.1 Growth-maximizing fiscal response -- 7.4.2 Welfare-maximizing fiscal response -- 7.5 Numerical analysis of transitional paths -- 7.5.1 Permanent shocks -- 7.5.2 Domestic co-financing and welfare gains -- 7.5.3 Some sensitivity analysis -- 7.6 Temporary transfers -- 7.6.1 Pure transfers -- 7.6.2 Tied transfers.

7.6.3 Permanent effects of a temporary transfer shock -- 7.7 Conclusions -- 8 Foreign aid, capital accumulation, and economic growth: some extensions -- 8.1 Generalization of model -- 8.2 Macroeconomic equilibrium -- 8.3 The dynamic effects of foreign aid: a numerical analysis -- 8.3.1 A permanent increase in the flow of foreign aid: long-run effects -- Tied aid -- Untied aid -- 8.3.2 Transitional dynamics -- Tied aid -- Untied aid -- 8.4 Sensitivity analysis -- 8.4.1 Elasticity of substitution in production versus flexibility in labor supply -- 8.4.2 Welfare comparisons -- 8.4.3 Generalizations of the production function -- 8.4.4 Sensitivity of transitional dynamics -- 8.5 Consequences for the government fiscal balance -- 8.6 Conclusions -- Appendix -- Derivation of the equilibrium relationships (8.7a)-( 8.7d) -- Steady-state equilibrium -- References -- Index.