The neoclassical theory of project evaluation is based on models in which agents discount the future at a constant exponential rate. But there is strong empirical evidence that people discount the future hyperbolically, applying larger annual discount rates to near-term returns than to returns...

The authors develop a numerical endogenous growth model approximating an infinite horizon, which allows them to investigate the relationship between trade liberalization and economic growth. Economic theory generally implies that trade liberalization will improve economic growth, and the two...

A recent but rapidly growing empirical literature focuses on the relationship between public and private capital. But for the most part, it ignores the heterogeneity of public investment. In many countries, especially in the developing world, public investment includes not only basic...

This analysis conducts dynamic simulations to determine how major variables interact across sectors. Changes in growth performance, more than anything else, were responsible for the sharp drops in aggregate savings in 1980-82 in Korea and in 1984-85 in the Philippines. In Korea, per capita...

The authors study the economic performance of ten Caribbean islands in two groups: six small islands from the Organization of Eastern Caribbean States (OECS) and four larger islands: Barbados, Dominican Republic, Jamaica, and Trinidad and Tobago. They compute external shocks together with each...

The decline in private savings since 1982 is arguably the most important problem in high debt countries. A reversal of the trend is essential if growth is to be restored. Three factors predominate : 1) the extent of intertemporal substitution; 2) attitudes toward risk; and 3) private/public...

With the recent resurgence of interest in equity, inequality, and growth, the possibility of a negative relationship between inequality and economic growth, has received renewed interest in the literature. Faced with the prospect that high levels of inequality may persist, and give rise to...

In the past 35 years, China, Hong Kong, Korea, Singapore, and Taiwan (China) have transformed themselves from technologically backwards and poor economies to relatively modern, affluent economies. Each has experienced more than a fourfold increase in per capita income. In each, a significant...

The authors of this paper expand on earlier studies of the determinants of foreign direct investment (FDI) by empirically analyzing various factors - including political risk, business conditions, and macroeconomic variables - that influence direct investment flows to developing countries. They...

The authors show that exported products exit the US market sooner if they violate the Heckscher-Ohlin notion of comparative advantage. Crucially, this pattern is stronger when exporting country has a well-developed banking system, measured by a high ratio of bank credit over the GDP. Banks thus...