To what extent do firms rely on rural output for demand and capital? We provide new evidence on this classic development question by examining the impact of agricultural output on local economic activity. Rainfall provides exogenous and significant variation in rural earnings. We find that such fluctuations have a lasting impact on urban firms, with effects concentrated in the manufacturing sec...

This paper analyses the e¤ects of reducing unfunded social security and population ageing on economic growth and welfare, both for a small open economy and for a closed economy. The economy consists of a service sector and a commodity sector. Productivity growth only occurs in the latter sector and is assumed to depend positively on its size. It is shown that if old agents mainly demand labour ...

New U.S. evidence from NIPA contradicts some of the well-known Kaldor stylized facts, and call for a reformulation of the modern theory of economic growth. Among these new facts, two must be stressed: A permanent decline in the relative price of durable goods, and a permanent increase in the real equipment to real GDP ratio. To be consistent with these new facts, growth models must include at l...

In this paper we show the existence of a negative relationship between long run growth and labor market imperfections both theoretically and empirically. We consider a “monopolistic union” imperfect labor market in a neoclassical growth framework and show that labor market rigidity, captured by the mark-up over the reservation wage, does lower the growth rate along the transitional path. We ver...

This paper examines whether endogenous growth processes can be found in middle income country contexts. Estimation proceeds by means of dynamic heterogeneous panel analysis. Empirical evidence ...nds in favour of both knowledge spill-over e¤ects, and of positive impacts on total factor productivty growth by Schumpeterian innovative activity. A crucial ...nding is that spill-over e¤ects emerge f...

In this paper, I argue that the two theoretical prerequisites of balanced growth purely labor augmenting technical progress and a unitary capital-labor elasticity are inconsistent with long-run evidence from a simple decomposition of the post-war U.S. economy into heterogeneous industries. My decomposition is motivated by empirical evidence that the degree of substitution between capital and la...

a r t i c l e i n f o JEL classification: E62 H22 O41 Keywords: Two-sector model Human capital Optimal factor tax incidence This paper studies the optimal factor tax incidence in a standard two-sector, human capital-based endoge-nous growth model elucidated by Lucas (1988). Capital income taxes generate dynamic inefficiency for capital accumulation and labor income taxes create dynamic ineffici...

We analyze the possibility of eventual extinction of a replenishable economic asset (natural resource or capital) whose stocks follow a stationary Markov process with zero as an absorbing state. In particular, the stochastic process of stocks is determined by a given sequence of i.i.d. random variables with bounded support and a positive-valued transition function that maps the current level of...

This paper studies the impact of a natural resource boom on structural change and real exchange rate dynamics, taking into account the indirect effect that operates through relative sectoral productivity changes. The paper's contribution to the Dutch disease literature is threefold. First, I extend the simple learning by doing productivity specification to include trade barriers and technology ...

This review article takes Peter Albin’s book Barriers and Bounds of Rationality : Essays on Economic Complexity and Dynamics in Interacti6e Systems as the starting point of a general assessment of complexity analysis from the point of view of the scope and limits of human rationality. In particular, this article examines the constraints upon human rationality. In particular, this article examin...