TY  - JOUR
AU  - Clarida,Richard H.
TI  - International Capital Mobility, Public Investment and Economic Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4506
PY  - 1993
Y2  - October 1993
UR  - http://www.nber.org/papers/w4506
L1  - http://www.nber.org/papers/w4506.pdf
N1  - Author contact info:
Richard H. Clarida
Columbia University
420 West 118th Street
Room 1111, IAB
New York, NY  10027
Tel: 212/854-3676
Fax: 212/854-8059
E-Mail: rhc2@columbia.edu
AB  - This paper presents a neoclassical model of international capital flows, public investment, and economic growth.  Because public capital is non-traded and is imperfectly substitutable for private capital, the open economy converges only gradually to the Solow steady-state notwithstanding the fact that international capital mobility is perfect.  Along the convergence path, the economy initially runs a current account deficit that reflects a consumption boom and a surge in public spending.  Over time, the rate of public investment declines as does the rate of growth in the standard measure of multifactor productivity in the private sector, the Solow residual.
ER  -