An Efficiency Frontier Model for Analysing Macroeconomic Implications of Structural Shocks

This paper proposes a simple framework for comparing alternative non-steady-state dynamic adjustments in response to structural shocks. The efficiency frontier model (EFM) provides a tractable solution method to mimic sequences of temporary general equilibria under various hypotheses about expectations, the severity of restrictions on technology and the malleability of factors, and asset market structures. The prototype EFM presented is a first step towards capturing 'development' aspects of the growth process.