In this paper we present an endogenous growth model with productive public capital and pollution. As to pollution we assume that it is a by-product of aggregate production and that it negatively affects utility of the household but not production possibilities directly. The paper studies the dynamics of the model and demonstrates that there exists either a unique balanced growth path which is a...

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&...

We consider an overlapping generations model with uncertain lifetime and endogenous growth. Individuals have to choose the length of time devoted to schooling before starting to work. We show that it depends positively on life expectancy but that the positive e ect of a longer life on growth could be o set by a decrease in the participation rate. Dynamics are characterized by a delay di erentia...

We consider a two-sector economy with positive intersectoral external effects and nonincreasing social returns. We show that if the discount factor r is close to 1 then local indeterminacy may be obtained with mild market imperfections. Moreover, with additional conditions, when r is made smaller the steady state becomes totally unstable and quasi-periodic cycles, along which equilibrium paths ...

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...

In this paper we study growth and welfare effects of fiscal policy in an endogenous growth model with public capital and environmental pollution. As to pollution we assume that it is due to aggregate production. Pollution does not have direct effects as concerns production possibilities but it only reduces utility of the household. The paper then studies growth effects of fiscal policy for the ...

This paper quantifies the contributions of sectoral productivity growth and structural change to aggregate productivity convergence. Existing evidence is inconclusive because it focuses on convergence within sector and its methodology depends sensitively on the conversion factor used to compare sectoral productivity levels across countries. Thus, a methodology – β-decomposition – is proposed to...

A growth model is developed for an open dual economy. Th e economy expands due to a higher growth rate of labour productivity in the modern sector through the Kaldor-Verdoorn channel and higher eff ective demand through a Keynesian channel. Th e model incorporates a retardation mechanism aff ecting the slopes of productivity and output growth schedules as labour surplus and economies of scale d...

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...

We study issues related to the long-run distribution of wealth in two variants of Ramsey’s model of optimal capital accumulation. First we show that, in the case where a government levies a progressive income tax, there exist infinitely many stationary equilibria in which all households own positive capital stocks. Moreover, it is demonstrated that non-stationary equilibria can exhibit complica...