Analysis Of Economic Growth Affected Foreign Economic Aid

In this paper, we establish two classes of economic growth models with Foreign Economic Aid, and discuss how Foreign Economic Aid affects economic growth.In the first place, in a Uzawa-Lucas model with leisure and Foreign Economic Aid, the segment of production engineering is divide into the segment of material production and the segment of human education production. In genral, we use Hamilton function method and CRRA utility function. We make out: when making leisure exogenous, it can be seen that when θ > 1, Foreign Economic Aid is negatively related to the balanced economic growth rate of aggregate output, consumption, material capital and when 0 < θ < 1 Foreign Economic Aid is positively related to the balanced economic growth rate of aggregate output, consumption, material capital, and a three dimensions system about aggregate output, consumption, material capital is gained and saddle-path steady. When making leisure endogenous, the balanced economic growth rate of aggregate output, material capital, consumption, human capital are zero. it can be also seen that Foreign Economic Aid is negatively related to the rate of consumption-capital, productivity-capital and positively related to human capital quanta.Secondly, we generalize Obstfeld determined models to stochastic economic growth model and discuss how Foreign Economic Aid affects economic growth in non-deterministic system. At first, we disscuss the linear restrictive stochastic optimization problem and use the principle of Bellman stochastic optimization and quadratic utility function. We obtain that stationary growth rate is no related to risk, stationary growth rate is positively related to Foreign Economic Aid when time preference rate passes productive growth rate and Foreign Economic Aid improves the people welfare when the parameters satisfy some conditions. Then, we disscuss the nonlinear restrictive stochastic optimization problem and use the principle of Bellman stochastic optimization and CRRA utility function, obtain that stationary growth rate is positively related to Foreign Economic Aid when the parameters of utility function and production function satisfy some inequality and otherwise stationary growth rate is negatively related to Foreign Economic Aid.