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&...

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...

We develop a new general equilibrium growth accounting framework that features increasing returns to scale, imperfect competition and incorporates technological revolutions into the description of technical progress. We propose a way to tell apart revolutionary changes in technology and incremental innovations using stock market data. We use our framework to jointly estimate the overall embodie...

In this note we study the distortions in an endogenous growth model developed by Grimaud and Tournemaine (2007), where new pieces of knowledge are produced in a R&D sector and used to reduce pollution emissions. Using this model along with a realistic calibration, we conclude that the economy strongly underinvests in R&D, such that the policy maker would need to implement a strong tax-subsidy s...

Distortions in private investment due to credit frictions, and in public investment due to corruption and bureaucratic inefficiencies, have both been suggested as important factors in accounting for the cross-country per capita income distribution. We introduce two modiÞcations to the standard one-sector neoclassical growth model to incorporate these distortions. The model is calibrated using d...

We build an endogenous growth model with automation (the replacement of low-skill workers machines) and horizontal innovation creation new products). Over time, the share innovations endogenously increases through increase in wages, leading to skill premium a decline labor share. calibrate US economy show that it quantitatively replicates paths premium, share, productivity. Our offers perspecti...