An analysis of the concept behind the modernization and dependency theories

Opposing Outlooks on Development Modernization theory and dependency theory are the two most apparent post-colonial interpretations of and approaches to development. The two contrasting theories do not share similar outlooks on development, which makes their differences of major importance. The underlying argument for the reasoning behind why these theories are so different is that they are both reflections of the political, economic and social environment in which they were created.

An analysis of the concept behind the modernization and dependency theories

The reason is that central banks react to variables, such as inflation and the output gap, which are endogenous to monetary policy shocks.

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Endogeneity implies a correlation between regressors and the error term, and hence, an asymptotic bias. In principle, Instrumental Variables IV estimation can solve this endogeneity problem. In practice, IV estimation poses challenges as the validity of potential instruments also depends on other economic relationships.

We argue in favor of OLS estimation of monetary policy rules. To that end, we show analytically in the three-equation New Keynesian model that the asymptotic OLS bias is proportional to the fraction of the variance of regressors accounted for by monetary policy shocks.

Using Monte Carlo simulation, we then show that this relationship also holds in a quantitative model of the U.

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As monetary policy shocks explain only a small fraction of the variance of regressors typically included in monetary policy rules, the endogeneity bias is small.

Using simulations, we show that, for realistic sample sizes, the OLS estimator of monetary policy parameters outperforms IV estimators.Branches of history History of the arts.

Histories have been written about architecture, sculpture, painting, music, dance, theatre, motion pictures, television, and timberdesignmag.come essential differences, these forms of historiography have some common features.

Development theory: Development theory, cluster of research and theories on economic and political development. The use of the term development to refer to national economic growth emerged in the United States beginning in the s and in association with a key American foreign policy concern: how to shape the future.

Beyond the Horizon: Chronoschisms and Historical Distance.

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An analysis of the concept behind the modernization and dependency theories

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Modernization Theory Versus Dependency Theory | Philani H Dhlamini - timberdesignmag.com