Endogenous growth theory has had some success in explaining the observed data related to the process of economic growth. However, the results of the models in this literature are typically very sensitive to their micro-economic structure. It is therefore important to understand how the growth process behaves under more general specifications of such features as the number of commodities, the nu...

A process of endogenous human capital formation is analyzed in combination with the existence of trade unions and banks. By lowering opportunity costs for schooling, trade unions provide incentive for human capital investments for parts of the workforce. Imperfect competition in the banking sector creates a self-selection situation favorable for long-term investment giving firms the possibility...

This paper develops a classical-Marxian macroeconomic model to examine the growth and distributional consequences of education. First, the role of education in skill formation is considered and it is shown that an expansion in education will promote growth and have beneficial distributional effects within the working class, but it will redistribute income from workers to capitalists. Second, th...

We analyze how different budgetary rules affect the stability of an economy in a basic endogenous growth model with public debt and a state-dependent consumption tax rate. We show that a discretionary policy implies that the government violates its inter-temporal budget constraint along a balanced growth path, whereas a balanced budget rule guarantees that the economy is stable. A rule based de...

We address the issue of altruism when standard-of-living aspirations are transmitted from one generation to the other. In that case, the in uence of altruistic parents is not limited to the bequest they could leave; indeed, they direct the evolution of children's aspirations toward raising their utility by refraining their own consumption standard. We show that, even if there is no bequest, alt...

This paper develops an endogenous growth model with dualism in human capital accumulation of two types of individuals. The government imposes a proportional redistributive tax on the resources of the rich individual to finance the educational subsidy given to the poor individuals. We find out the properties of optimal tax cum educational subsidy policy using Stackelberg differential game framew...

Empirical evidence suggests that the differences in rates of technical progress across sectors are time-variant, implying that the bias in technological change is not constant. In this paper, we analyze the implications of this nonconstant sectoral biased technical change for structural change and we assess whether this is an important factor behind structural transformations. To this end, we d...

We modify a Lucas-type endogenous growth model to contain endogenous labour supply, imperfect international capital movements, and estimated interest and education time functions. Solutions based on realistic calibrations show that (i) the rate of human capital depreciation through ageing has a much stronger negative impact on growth than further changes in the population growth rate or the Fri...

We study the implications of the creative destruction lifecycle of innovation for asset prices. We develop a general equilibrium model of endogenous firm creation and destruction where “incremental” innovations by incumbents and “radical” innovations by entrants drive the volatility of growth prospects of the economy. Higher entry—bigger threat of displacement of incumbents by entrants—implies ...

This paper combines horizontal and vertical innovations to build an endogenous growth model that allows for structural change. Older technologies are continuously replaced by newer ones due to creative destruction and new technologies appear as a result of horizontal innovations and as a result of consumers’ preferences for variety. We assume fixed operational costs for the manufacturing sector...