Following the American Psychological Association’s Guidelines
SUMMARY OF THE PAPER
HOW THE AUTHOR EXTENDS THE LITERATURE
CRITIQUE OF THE PAPER
The literature review part has not been developed well. By making an online search, it is possible to find easily some other papers which has the same claim with this paper. For example, Prasad and Subramainian (2006) have studied the same claim and they found the same result with the author. She needs to spend more time to review the literature. Without checking her model, she could be criticized for this, because maybe another author(s) has discussed the same question and may he or she have developed a similar model or the same model with hers before her study.
Another important critique for her paper, she have a data set on the American States and tried to compare her study's results with some papers – actually she did give any other article name as examples from the neoclassical growth theory – using cross-country data. Between the American states, there is no important barrier for the capital, however, for different countries we might have some economic, political and other barriers and these barriers might influence the direction of the capital flows among the countries. Consequently, her study follows a methodology that each different economy has the same political, economical and even social environment and that means her study ignores cultural differences and some other important differences. She should have included these differences among the states.
She uses a dynamic stochastic general equilibrium model and she claims that relative investment is determined by relative productivity of the states and it is free from the saving levels of the states. However, she does not provide any proof that investment is free from saving levels. As we know the level of savings in the developing countries is very important determiner of the investments. She also does not discuss this assumption enough and she does not provide any information from other studies on this issue.
REFERENCES
Prasad, E., Rajan, R., and Subramanian, A. (2006). Patterns of International Capital Flows and their Implications for Economic Development. IMF, Research Paper. Retrieved from http://faculty.chicagobooth.edu/raghuram.rajan/research/papers/PatternsofInternationalCapitalFlowsandTheirImplicationsForEconomicDevelopment.pdf.
Lal, D. (1998). Taxation and Regulation as Barriers to International Investment Flows. University of California, Department of Economics, Working Paper, No.785. Retrieved from http://www.econ.ucla.edu/workingpapers/wp785.pdf.
Baxter, M. and Crucini, M. J. (1993). Explaining Saving-Investment Correlations. The American Economic Review, Vol.83, Issue 3, pp.416-436.
Kelley, A. C. (1988). Population Pressures, Saving, and Investment in the Third World: Some Puzzles. Economic Development and Culture, Vol.36, No.3, pp.449-464.
