TY - JOUR
T1 - Fiscal policy and structural transformation in developing economies
AU - Skott, Peter
N1 - Publisher Copyright:
© 2020 Elsevier B.V.
PY - 2021/3
Y1 - 2021/3
N2 - Developing economies with high levels of open or hidden unemployment face structural transformation problems. Unlike in mature economies there are no structural aggregate demand problems, and sustained aggregate demand stimulus can lead to a profit squeeze in the modern sector and deindustrialization. Adaptations of ‘functional finance’ to developing economies should aim to stabilize the level and composition of demand at values that are consistent with a target rate of growth of the modern sector. Populist temptations, however, may lead to deindustrialization.
AB - Developing economies with high levels of open or hidden unemployment face structural transformation problems. Unlike in mature economies there are no structural aggregate demand problems, and sustained aggregate demand stimulus can lead to a profit squeeze in the modern sector and deindustrialization. Adaptations of ‘functional finance’ to developing economies should aim to stabilize the level and composition of demand at values that are consistent with a target rate of growth of the modern sector. Populist temptations, however, may lead to deindustrialization.
KW - Dutch disease
KW - functional finance
KW - Sectoral transformation
UR - http://www.scopus.com/inward/record.url?scp=85095458275&partnerID=8YFLogxK
U2 - 10.1016/j.strueco.2020.10.006
DO - 10.1016/j.strueco.2020.10.006
M3 - Journal article
AN - SCOPUS:85095458275
SN - 0954-349X
VL - 56
SP - 129
EP - 140
JO - Structural Change and Economic Dynamics
JF - Structural Change and Economic Dynamics
ER -