The traditional view of growth and fluctuations implies that aggregate demand shocks result in only transitory departures from trend or “normal” output, which is determined exclusively by aggregate supply factors. Using a simple dynamic framework for a less-developed economy, a series of models is developed to show that aggregate demand can have a permanent effect on economic growth. It is show...

Our objective in this article is to study analytically the effect of borrowing constraints on asset returns. We explicitly characterize the equilibrium for an exchange economy with two agents who differ in their risk aversion and are prohibited from borrowing. In a representative-agent economy with CRRA preferences, the Sharpe ratio of equity returns and the riskfree rate are linked by the risk...

This paper investigates whether technological shocks, constructed to be consistent with the observed cross-country income dispersion, are also capable of accounting for development regularities related to capital accumulation. This question is approached via a quantitative theoretical analysis of an integrated world economy model. An open economy framework constrains country heterogeneity to be...

We develop a closed-economy DSGE model of the Indian economy and estimate it by Bayesian Maximum Likelihood methods using Dynare. We build up in stages to a model with a number of features important for emerging economies in general and the Indian economy in particular: a large proportion of credit-constrained consumers, a financial accelerator facing domestic firms seeking to finance their inv...

111 We present a computable general equilibrium model of the interface between the Great Salt Lake (GSL) ecosystem and the regional economy that impacts the ecosystem. With respect to the ecosystem, the model treats the various representative species as net-energy maximizers and bases population dynamics on the period-by-period sizes of surplus net energy. Energy markets-where predators and pre...

Our objective in this article is to study analytically the effect of borrowing constraints on asset returns in an economy where agents are heterogenous with respect to their risk aversion. We use asymptotic analysis to characterize the equilibrium in a general equilibrium exchange economy with an arbitrary number of agents who differ in their risk aversion and face limits on borrowing. We find ...

A solution methodology employing finite elements and a parameterized expectations algorithm is proposed for computing the equilibrium of a CIA model economy. The stochastic growth model considered introduces money via a CIA constraint, and takes consumption as the cash good and leisure and capital investment as credit goods. The ability of the methodology to approximate the solution of the mode...

We study the optimal anticipated policy in a pure-currency economy with flexible prices and a nondegenerate distribution of money holdings. The economy features a business cycle and lump-sum monetary injections have distributional effects that depend on the state of the cycle. We parsimoniously characterize the dynamics of the economy and study the optimal regulation of the money supply as a fu...

The emergence of behavioral economics is one of the most significant conceptual developments in the social sciences in the past 40 years. The central figure in the field in its early years was Richard Thaler. In this article, I review and discuss his scientific contributions. JEL classification: B2, D9, G1

Biology and Gender in the Labor Market Can biology help us to better understand gender differences in labor market behavior and outcomes? This chapter reviews the emerging literature which sheds light on this question, considering research in four broad areas: i) behavioral endocrinology; ii) human genetics; iii) neuroeconomics; and iv) sensory functioning and time-space perceptions. JEL Classi...