Globalization is accompanied by increasing current account imbalances. They can undermine the positive impacts of increasing international cooperation and trade on economic growth. By applying an economic growth model that requests for long-term compensation of short-term current account deficits, we derive patterns of international trade. Model output, however, is challenged by empirical data ...

Emerging markets exhibit high returns to capital, the ‘Lucas Paradox,’ alongside volatile growth rate regimes. We investigate the role of long-run risks, i.e., risk due to fluctuations in economic growth rates, in leading to return differentials across countries. We take the perspective of a US investor and outline an empirical strategy to identify risky growth shocks and quantify their implica...

Essay 1: To replicate an industrial revolution: from exogenous to endogenous growth In the last quarter of the second millennium many countries experienced, simultaneously, an industrial revolution (an exponential increase in the income per capita) and a demographic transition (an increase first and a decrease later of the population growth rate). How do we account for these facts? Following Lu...

Nowhere is this separation greater than in representative agent models, which have been one of the dominant paradigms for studying business cycles, economic growth, and other macroeconomic phenomena. Not only do these models preclude us from studying the relationship between distribution and efficiency, but they also can be deeply misleading in the way they lead us to assess efficiency. Conside...

A. Topics and Tools ............................................................................ 1 B. The Lucas Model in Historical Perspective ............................................ 2 Keynesian macroeconomics in the 1960s ......................................................................... 2 Monetarism ....................................................................................

A. Topics and Tools ............................................................................ 1 B. The Lucas Model in Historical Perspective............................................ 2 Keynesian macroeconomics in the 1960s ......................................................................... 2 Monetarism .....................................................................................

The recent literature on taxation and growth has stressed the optimality of a zero long-run taxation on all accumulative factors of production. For a given path of government spending, the optimal tax plan requires the government to build up a positive stock of public wealth in the short run in the long-run, government spending can be financed with the income accruing from the management of the...

The causes behind achieving different economic growth rates have been a major focus of economic research for a long time now, the result of which are various growth theories: from the Harrod-Domar model based on the capital accumulation to the modern, endogenous theories that emphasize the role of technological progress (Romer, 1986, 1990 ) and human capital (Lucas, 1988). It is well known that...