The two-gap paradigm in the chinese case: a pedagogical exercise

Abstract

There is no accepted paradigm for the macro model of a developing country. A two-gap model, which is, in fact, an open economy version of the Harrod Domar Model, has been constructed for China based on recently available national accounting data. Some problems of growth in relation to domestic policies and the trade accounts can be handled for this type of system. The small two-gap model also serves as a useful pedagogical tool, and is very easily programmed for student use.