9_17_Notes - Econ 4730 F2008 (9/17/2008) The Stokey-Young...

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Econ 4730 F2008 (9/17/2008) The Stokey-Young (SY from now on) view claims, (a) In general, trade retards learning and hence development, and (b) For the Asian NIEs, this may not hold because trade harms even less developed economies then themselves. This is sound logic deduction of what oversimplified assumptions imply. It is (c) well received in authoritative text books in growth and development, because of it is logically well argued, and iconoclastic in point of view, but (d) both contradictory to historical facts and erroneous as policy recommendation. To study the situation, one can adopt the ‘bounded learning’ hypothesis of Alwyn Young, and focus upon a hypothetical ‘locked out’ phenomenon as an acid test. For bounded learning, it shall be assumed that once the output of a country has reached its bound, productivity stays constant. For locked out, it shall be assumed that all productivities become fixed forever. What SY claims in a sharpened form is that
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This note was uploaded on 02/20/2009 for the course ECON 4730 taught by Professor Henrywan during the Fall '08 term at Cornell University (Engineering School).

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9_17_Notes - Econ 4730 F2008 (9/17/2008) The Stokey-Young...

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