Template-type: ReDIF-Paper 1.0
Author-Name: Ziesemer, Thomas
Author-Email: t.ziesemer@maastrichtuniversity.nl
Author-Workplace-Name: UNU-MERIT, Maastricht University
Title: Semi-endogenous growth in a non-Walrasian DSEM for Brazil: Estimation and 
	 simulation of changes in foreign income, human capital, R&D, and terms of trade
Abstract: In an empirical, dynamic simultaneous equation model (DSEM) for Brazil
	 with 22 equations and variables, we show that foreign income is a driver
	 of economic growth besides semi-endogenous technical change. With a
	 balance-of-payments constraint and endogenous terms of trade, the major
	 mechanism is (i) world GDP driving exports, (ii) exports paying for
	 imported capital goods, which (iii) enter a production function
	 increasing output and the foreign-debt/GDP ratio and (iv) increase the
	 endogenous labour force, and (v) slightly reduce human capital growth.
	 Permanent increases of human capital increase the R&D/GDP ratio,
	 labour-augmenting productivity, and GDP. A policy to increase the
	 R&D/GDP ratio leads to more human capital, labour productivity and GDP
	 levels. Both knowledge policies reduce the debt/GDP ratio. A lasting
	 shock on the terms of trade reveals that there is no
	 Harberger-Laursen-Metzler effect. The results hold in the presence of
	 endogenous terms of trade, foreign debt, net foreign income, and net
	 current transfers from abroad, and non-Walrasian (dis-)equilibrium
	 variables: inflation and changing inventories for the goods market, and
	 unemployment in the labour market. Policy should strengthen the weak
	 link from R&D to technical change and make education more attractive.
Classification-JEL: F43, O11, O41, O47, O54
Keywords: dynamic simultaneous equation model, balance-of-payments, constrained
	 growth, imported capital goods, foreign debt, human capital, R&D 
Series: UNU-MERIT Working Papers
Creation-Date: 20220412
Number: 2022-013
File-URL: https://unu-merit.nl/publications/wppdf/2022/wp2022-013.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2022013