From Growth Theory to Policy Design

This paper focuses on how growth theory can guide growth policy design. It first argues that policy matters for growth, in particular when policy variables are interacted with country?specific variables (financial development, institutional environ...

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Bibliographic Details
Main Authors:	Aghion, Philippe, Durlauf, Steven
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2017
Subjects:	AGGREGATE INVESTMENT AGGREGATE OUTPUT AGGREGATE PRODUCTION FUNCTION ALLOCATION AMERICAN ECONOMIC REVIEW ARBITRAGE AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE LEVEL BANK LOANS BLACK MARKET BLACK MARKET PREMIUM BUDGET DEFICIT BUDGET DEFICITS BUDGETARY POLICIES BUSINESS CYCLE CAPITAL ACCUMULATION CAPITAL INVESTMENT CAPITAL STOCK CASE STUDIES COMPETITION POLICIES COMPETITION POLICY COMPLEMENTARITIES CONTEMPORANEOUS EXTERNALITIES CORPORATE PROFITS COUNTRY CASE COUNTRY CHARACTERISTICS COUNTRY LEVEL CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT RATIONING CROSS COUNTRY DATA SETS DECENTRALIZATION DECREASING RETURNS DEMOCRACY DETERMINANTS OF GROWTH DEVELOPMENT PRACTITIONERS DIMINISHING RETURNS DISTRIBUTION OF WEALTH DOMESTIC SAVINGS ECONOMETRICS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC INSTITUTIONS ECONOMIC LITERATURE ECONOMIC MANAGEMENT ECONOMIC POLICIES ECONOMIC RESEARCH ECONOMIC STUDIES ECONOMIC THEORY EDUCATIONAL ATTAINMENT EFFECT OF RECESSIONS ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL STUDIES EMPIRICAL WORK EQUILIBRIUM PRICES EXPLANATORY VARIABLES EXTERNALITIES FACTOR ACCUMULATION FINANCIAL DEVELOPMENT FINANCIAL SYSTEMS FISCAL POLICIES FIXED EFFECTS FOREIGN DIRECT INVESTMENT GDP GOVERNMENT EXPENDITURE GOVERNMENT SUBSIDIES GROWTH ANALYSIS GROWTH DETERMINANTS GROWTH DIAGNOSTICS GROWTH EFFECTS GROWTH EQUATION GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PATH GROWTH PERFORMANCE GROWTH POLICIES GROWTH POLICY GROWTH POTENTIAL GROWTH PROBLEM GROWTH PROCESS GROWTH RATE GROWTH RATE OF OUTPUT GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS GROWTH RESULTS GROWTH THEORIES GROWTH THEORY HIGH GROWTH HIGH GROWTH RATE HUMAN CAPITAL HUMAN CAPITAL INVESTMENT INCOME INCOME DISTRIBUTION INCREASE GROWTH INCREASING RETURNS INCUMBENT INDUSTRIALIZED COUNTRIES INFLATION INSTITUTIONAL ENVIRONMENT INSTRUMENTAL VARIABLES INTELLECTUAL CAPITAL INTERACTION COEFFICIENT INTERACTION TERMS INTEREST RATE INTERNATIONAL TRADE LABOR MARKET LEVEL OF DEVELOPMENT LEVELS OF CAPITAL LINK BETWEEN VOLATILITY LIQUIDITY LONG RUN LOW INTEREST RATE LOW INTEREST RATES MACRO POLICY MACROECONOMIC POLICY MACROECONOMIC STABILITY MACROECONOMIC VOLATILITY MACROECONOMICS MARGINAL PRODUCT MARGINAL VALUE MARKET CAPITALIZATION MARKET IMPERFECTIONS MICROECONOMICS MODEL OF GROWTH MONETARY ECONOMICS MONETARY UNION MONEY SUPPLY MONOPOLISTIC COMPETITION NATURAL RESOURCES NEOCLASSICAL GROWTH MODEL NEOCLASSICAL GROWTH THEORY NEOCLASSICAL MODEL NEOCLASSICAL THEORY NET INVESTMENT NEW GROWTH THEORIES OPPORTUNITY COST PANEL REGRESSIONS PER CAPITA GROWTH POLICY CHANGES POLICY MAKERS POLICY PACKAGES POLICY VARIABLES POLITICAL ECONOMY POSITIVE EFFECTS POVERTY REDUCTION PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROFIT MAXIMIZATION PROMOTING GROWTH PROPERTY RIGHTS RATE OF RETURN REAL INTEREST RATES RECESSION RECESSIONS REGRESSION ANALYSIS REGRESSION COEFFICIENTS REPUBLIC SAVING RATE SAVINGS SIGNIFICANT CORRELATION STAGNATION STATE OF KNOWLEDGE STOCK OF CAPITAL STRUCTURAL CHARACTERISTICS TAX TAXATION TECHNICAL CHANGE TECHNICAL PROGRESS TECHNOLOGICAL CHANGE TECHNOLOGICAL DEVELOPMENT TECHNOLOGICAL INNOVATION TECHNOLOGICAL PROGRESS TECHNOLOGY FRONTIER TFP TOTAL FACTOR PRODUCTIVITY TRADE LIBERALIZATION TRADE POLICY UNIT OF CAPITAL UTILITY MAXIMIZATION WAGES WEALTH WORLD INCOME DISTRIBUTION
Online Access:	http://documents.worldbank.org/curated/en/279301468150886957/From-growth-theory-to-policy-design http://hdl.handle.net/10986/28001

Description
Summary:	This paper focuses on how growth theory can guide growth policy design. It first argues that policy matters for growth, in particular when policy variables are interacted with country?specific variables (financial development, institutional environment, technological development, and so forth). Second, it argues that the Schumpeterian paradigm does a better job at delivering policy prescriptions that vary with country characteristics. Third, it discusses the advantages and drawbacks of growth regression analysis. Finally, it briefly describes and then questions the recently proposed 'growth diagnostic' approach.

From Growth Theory to Policy Design

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