The Solow Model in an Open Economy

Journal of Management and Financial Sciences, Vol. 1, No. 1, October 2008

23 Pages Posted: 15 Oct 2009 Last revised: 9 Jun 2013

See all articles by Wojciech Pacho

Wojciech Pacho

Warsaw School of Economics (SGH)

Date Written: October 10, 2008

Abstract

The aim of this article is to extend the traditional Solow model to a small open economy. We focus on the role of the speed of technological progress at the moment of full opening to international capital market. We are primarily interested in two fundamental issue: firstly, what advantages may a small economy gain from its opening to the international capital flow, and secondly, what is the role of savings in the open economy growth. The considerations are based on the assumption that the interest rate is formed exogenously.

Keywords: economic growth, open economy, national product, saving rate, technological progress

JEL Classification: O4, E43

Suggested Citation

Pacho, Wojciech, The Solow Model in an Open Economy (October 10, 2008). Journal of Management and Financial Sciences, Vol. 1, No. 1, October 2008 , Available at SSRN: https://ssrn.com/abstract=1486671 or http://dx.doi.org/10.2139/ssrn.1486671

Wojciech Pacho (Contact Author)

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

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