This paper presents a microfounded theory of long-term development. We model the interplay between economic variables, namely the process of human capital formation and technological progress, and the biological constraint of finite lifetime expectancy. All these processes affect each other and are endogenously determined. The model is analytically solved and simulated for illustrative purposes...

This paper extends the two-class monetary growth model by incorporating fiscal activity along the lines of Pasinetti (Cambridge J. Econ. 13, 25–36). Despite this extension, the Cambridge equation is found to be one of long-run equilibria. It is shown that Fiscal policy decreases the accumulation of capital, through an increase in the proportional tax on profits. An inflationary monetary policy ...

FDI has received surprisingly little attention in theoretical and empirical work on openness and growth. This paper presents a theoretical growth model where MNCs directly affect the endogenous growth rate via technological spillovers. This is novel since other endogenous growth models with MNCs, e.g. the Grossman-Helpman model, assume away the knowledge-spillovers aspect of FDI. We also presen...

We endogenize the discount rate via a broad measure of wealth and provide empirical evidence that wealth affects the discount rate negatively. We demonstrate that the Pontryagin conditions require positive felicity for intuitive results, whereas the concavity of the Hamiltonian requires negative felicity for optimality. This dilemma also holds for the endogenizations of Obstfeld (1990) and foll...

We study how external versus internal innovations promote economic growth through a tractable endogenous growth framework with multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in external R&D to acquire new product lines and in internal R&D to improve their existing product lines. A baseline model derives the theoretical implications of weaker scaling for external R&...

In the current age of trade and financial openness, local economies in developing countries are becoming increasingly exposed to external investments. The objective of the proposed two-sector model with environmental externalities is to provide an insight into the interaction between external investors and local communities with a focus upon the different strategies and income sources available...

According to a standard argument, higher income inequality fosters redistributive activities of the government in favor of the median income earner. This paper shows that if redistribution is achieved by a public provision of goods and services rather than by transfers, higher income inequality may imply a smaller size of the government in majority voting equilibrium. In addition to a static vo...

Structuralist and post Keynesian models differ in their assumptions about firms’ investment behavior and pricing/output decisions. This paper compares three benchmark models: Kaleckian, Robinsonian and Kaldorian. We analyze the implications of these models for the steady growth path and the cyclical properties of the economy, and evaluate the consistency of the theoretical predictions with empi...

This paper argues that accounting for the dynamic interactions between endogenous changes in longevity, the education composition of the population, and the associated fertility differential is crucial for understanding the economic and the demographic transition. In the model, heterogeneous individuals make optimal decisions about fertility, education of their children and type and intensity o...

This paper develops a two-sector growth model in which institutional investors play a significant role. A necessary and suffi cient condition is established under which these investors own the entire capital stock in the long run. The dependence of the long-run growth rate on the behaviour of such investors, and the effects of a productivity increase are analysed. JEL classification. O41, O43 A...