productive energy use and economic growth energy physical and human capital relationships abstract ecological and biophysical economists and historians of economics consider that availability of energy inputs has played a key role in driving economic growth in industrialized and emerging economies nevertheless being very sensitive to structural characteristics or stages of economic development the strength of this link differs among countries this study analyzes the role of energy in economic growth from a geographical standpoint by estimating an aggregate translog production function with human and physical capital and productive energy use as production factors within a growth framework panel data of 38 major countries for the period from 1995 to 2007 were used the strength of the link between energy and growth is analyzed for the whole sample and the following relevant country groups oecd bric nafta east asian east european and eu15 countries obtained results show that the calculated productivity elasticities with respect to energy use are positive for all country groups bric countries have higher elasticities around 0 37 and eu15 countries have lower elasticities around 0 12 weak substitutability relationships between energy and capital are observed for all groups except for bric and east european countries which show complementarity relationships

questioning the empirical basis of the environmental kuznets curve for co2 new evidence from a panel stationarity test robust to multiple breaks and cross dependence abstract this paper investigates the time series properties of per capita co2 emissions and per capita gdp levels for a sample of 86 countries over the period 1960 2000 for that purpose we employ a state of the art panel stationarity test which incorporates multiple shifts in level and slope thereby controlling for cross sectional dependence through bootstrap methods our analysis renders clear cut evidence that per capita gdp levels are nonstationary for the world as a whole while per capita co2 is found to be regime wise trend stationary the analysis of country groups shows that for africa and asia per capita co2 is best described as nonstationary while per capita gdp appears stationary around a broken trend in addition we find evidence of regime wise trend stationarity in both variables for the country groups consisting of america europe and oceania the results of our analysis carry important implications for the statistical modelling of the environmental kuznets curve for co2 since the differing order of integration in both variables for the world as a whole and for africa and asia calls into question the validity of panel cointegration techniques which assume that both variables are nonstationary and cointegrated with one another cointegration techniques would not be appropriate either for the case of america europe and oceania which are characterised by per capita gdp and co2 emissions being stationary around a broken trend similar conclusions are reached when we analyse country groups based on levels of development failure to properly characterise the time series properties of the data by not controlling for an unknown number of structural breaks and for cross sectional dependence could be responsible for the fragility and lack of robustness surrounding the estimation of environmental kuznets curves

adaptive economic growth this paper develops an evolutionary theory of adaptive growth understood as a product of structural change and economic self transformation based upon processes that are closely connected with but not reducible to the growth of knowledge the dominant connecting theme is enterprise the innovative variations it generates and the multiple connections between investment innovation demand and structural transformation in the market process the paper explores the dependence of macroeconomic productivity growth on the diversity of technical progress functions and income elasticities of demand at the industry level and the resolution of this diversity into patterns of economic change through market processes it is shown how industry growth rates are constrained by higher order processes of emergence that convert an ensemble of industry growth rates into an aggregate rate of growth the growth of productivity output and employment are determined mutually and endogenously and their values depend on the variation in the primary causal influences in the system

borrowing constraints human capital accumulation and growth abstract borrowing constraints increase aggregate savings and therefore may increase growth this paper argues however that by reducing human capital accumulation borrowing constraints also have negative effects on growth these effects are discussed in an overlapping generations model with endogenous growth empirical evidence for oecd and developing countries lend support to the main predictions of the model

convergence in per capita carbon dioxide emissions among g7 countries a tar panel unit root approach the subject of this paper is the examination the convergence of per capita carbon dioxide emissions of the g7 countries during the 1960 2005 period in a nonlinear panel analysis framework in this approach first the linearity of the series was tested and when the linearity was rejected the threshold autoregressive tar panel unit root test which splits the data into two regimes was employed to examine the stationarity properties of the series because the null of linearity was rejected in the first step we tested the stationarity of the series using the tar panel unit root test in the tar panel unit root test we found that the united kingdom was the transition country whose per capita carbon dioxide co2 emissions determined the switch from one regime to the other the results showed that convergence existed in the first regime and divergence in the second when we tested whether absolute or conditional convergence existed we found that the per capita co2 emissions were conditionally converging in the first regime

monetary uncertainty strategic wage setting and equilibrium employment abstract an important recent strand of literature has shown that if wages are set strategically by inflation averse non atomistic unions then equilibrium employment is sensitive to the monetary regime this note demonstrates that such sensitivity need not reflect a direct aversion to inflation by unions but instead may result from union concerns for employment objectives in circumstances in which the variance and mean value of inflation are positively related

industrialization under perfect foresight a world economy with a continuum of countries abstract a dynamic model of international trade with a continuum of countries is presented the terms of trade path each country takes as given are endogenous in the model countries differ by the rate of time preference and have populations of overlapping generations of labor industrialization is modeled as the reallocation of labor to the sector with external increasing returns the process of which is gradual due to a demographic constraint in a perfect foresight equilibrium countries with lower time preference industrialize and autarky policy is not effective for industrialization orbits may exist for countries with positive time preference journal of economic literature classification numbers d90 f10 f43 o14 o40

variable capital utilization and international business cycles this paper develops a two country international business cycle model with variable capital utilization using a standard depreciation in use technology variable capital utilization significantly reduces the required size of productivity shocks needed to replicate observed output volatility by 20 40 further the model generates positive comovement across countries in wages hours and investment while preserving empirically accurate predictions regarding the relative cross country correlations of output and consumption and the countercyclical behavior of net exports finally accounting for variable capital utilization reduces cross country correlation of true productivity shocks relative to that of the standard solow residual

capital income taxation and long run growth new perspectives abstract we study the effects of capital income taxation on long run growth in an endogenous growth framework with two distinguishing features endogenous population and international capital mobility endogenizing population growth introduces a new channel for taxes to affect economic growth and enables us to discriminate the effects of taxes on total versus per capita income growth allowing for capital mobility in the open economy we show how the effects of taxes on population growth and income growth across countries will vary in specific ways depending on the international income tax regimes and the relative preference bias of people towards the quantity and quality of their children the numerical results based on our calibrated model for the g 7 nations also indicate that although the effects of liberalizing capital flows on long run growth may not be very sizable the growth effects of changes in capital income tax rates can be tremendously magnified by cross border capital flows and cross border spillovers of policy effects

uniqueness and indeterminacy on the dynamics of endogenous growth abstract in this paper we study the dynamics of endogenous growth both in the model of lucas and in a generalization that incorporates a labor leisure choice we characterize the regions of the parameter space that give rise to unique equilibria as well as the regions that yield a continuum of equilibria with positive growth rates we find that such multiple equilibria exist for empirically very plausible parameters in particular when the lucas model is modified to incorporate endogenous labor journal of economic literature numbers e00 e3 o40

a theory of ambiguity credibility and inflation under discretion and asymmetric information this paper develops a positive theory of credibility ambiguity and inflation under discretion and asymmetric information the monetary policymaker maximizes his own politically motivated objective function that is positively related to economic stimulation through monetary surprises and negatively related to monetary growth the relative importance he assigns to each target shifts stochastically through time his current preference trade off is known to him but not to the public when choosing the state contingent path of money growth for the present and the future the policymaker compares the benefits from current stimulation with the costs associated with higher future inflation expectations current monetary growth conveys information to the public about future money growth because there is persistence in the policymaker s objectives although expectations are rational information is imperfect because monetary control procedures are imprecise as a result the public cannot correctly distinguish persistent changes of emphasis on different policy objectives from transitory monetary control errors the public becomes aware of changes gradually by observing past monetary growth credibility is defined in terms of the speed with which the public recognizes changes in the objectives of the policymaker credibility is lower the noisier monetary control and the more stable the objectives of the policymaker looser monetary control and a higher degree of time preference on the part of the policymaker induce him to produce higher and more variable monetary growth when the policymaker is free to determine the accuracy of monetary control he does not always choose the most effective control available in spite of the fact that monetary surprises always have an expected value of zero the reason is that ambiguous control procedures enable the policymaker to generate positive surprises when he cares more than on average about economic stimulation he leaves the inevitable negative surprises for periods in which he cares more about inflation prevention this result provides an explanation for the fed s preference for ambiguity recently documented by goodfriend 1986 the policymaker is more likely to pick more ambiguous control procedures the more uncertain his objectives and the higher his time preference the paper also provides a theoretical underpinning for the well documented crosscountry positive correlation between the level and the variability of inflation

growth and the international transmission of business cycles two country single good real business cycle models predict that the cross country correlation of output is smaller than the cross country correlations of consumption and productivity in contrast to the evidence in historical samples the objective of this paper is to reproduce the observed empirical evidence in a two country real business cycle model with endogenous growth central features of the model include a nonmarket sector and international externalities in production the model generates realistic cross country correlations for output consumption and productivity with standard parameter values copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

growth effects of flat rate taxes recent estimates of the potential growth effects of tax reform vary wildly ranging from zero to eight percentage points using an endogenous growth model we assess which model features and parameter values are important for determining the quantitative impact of tax reform we find that the critical parameters are factor shares depreciation rates the elasticity of intertemporal substitution and the elasticity of labor supply the elasticities of substitution in production on the other hand are relatively unimportant the quantitative estimates in several recent papers are compared with each other and with some of the evidence from u s experience we find that robert lucas s conclusion that tax reform would have little or no effect on the u s growth rate is theoretically robust and consistent with the evidence

uncertain effects of money and the link between the inflation rate and inflation uncertainty in the postwar period high rates of inflation are associated with high levels of inflation uncertainty in this paper i argue that the inflation rate and inflation uncertainty are linked by forecasters uncertainty about the impact of money growth on the price level and i present evidence indicating that this has been the case as long as the impact of money growth on the price level remains unpredictable then even predictable money growth will cause inflation uncertainty with its accompanying adverse effects on employment and output

aggregate demand shocks private signals and employment variability can better information be harmful abstract the consequences of private information concerning the realization of aggregate demand shocks are investigated in the context of a standard macroeconomic model it is found that an improvement in information quality can be damaging in the sense of amplifying employment fluctuations the source of this result is an externality arising from individual firm wage decisions which leads to a collective over reaction to private information

income convergence within and between countries we study how trade changes the rate of income convergence within and between countries in a model of endogenous growth an externality in the production of human capital implies that inequality slows down growth under autarky eventually incomes converge raising the growth rate trade accelerates slows down growth and the rate of income convergence in the poor rich country in the long run trade ensures that countries grow at the same rate and that the ratio of their incomes tends to 1 trade pattern reversals are possible since the initially wealthy country may be overtaken by the poor country the purpose of this paper is to study how trade affects the pattern of income convergence within countries and between countries in an endogenous growth model moreover we analyze the related issue of how income inequality alters the effects of trade we use a dynamic 2 x 2 factor proportions model with endogenous growth to examine income convergence the factors of production are unskilled labor and human capital growth proceeds through the accumulation of human capital by agents who are differentiated by their stocks of human capital agents live a single period during which they spend resources in their descendants education the expenditure in a descendant s education enters the utility function of each agent in our model the accumulation of human capital is the result of both formal and informal processes the formal process corresponds to schooling and depends on parental expenditure in education the informal process of producing human capital corresponds to the education agents receive in their homes and through social interaction with neighbors and schoolmates in the informal process the first effect depends on the education of the parents while the second corresponds to an externality acting through the average level of human capital in society we begin our study by examining income convergence in a closed economy as the society s stock of human capital increases the relative price of the equitatively distributed factor unskilled labor goes up which tends to reduce long term inequality on the other hand rich agents spend a higher proportion of their income in education tending to raise inequality we derive a sufficient condition for the former effect to outweigh the latter effect that is for inequality to disappear in the

on the stationarity of co2 emissions in oecd and brics countries a sequential testing approach abstract this study examines the non stationary properties of the per capita carbon dioxide emissions of 29 selected oecd countries plus brazil china india and south africa over the period 1960 2014 following a sequential testing procedure we analyze the historical path of the variable regarding the possible presence of abrupt ruptures and then carry out appropriate unit root tests the results show that the co2 emissions per capita are better characterised by a random walk for all the different countries furthermore the break dates and the growth rate were estimated as well for each country under study finally we decompose the carbon emissions into a secular or trend component and a cyclical component and propose a chronology of cycles in growth rates

real supply shocks and the money growth inflation relationship abstract this paper analyzes how real supply shocks affect monetary policy although it is widely accepted that money growth and inflation are one to one related in the long run short run deviations are usually the case theoretically we analyze whether such short run deviations can be attributed to global real supply shocks impinging on the economy and empirically we provide evidence in favor of this hypothesis as well confirming that the money growth rate and inflation is one to one related in the long run for the united states

convergence in carbon dioxide emissions among industrialised countries revisited this paper examines the existence of stochastic and deterministic convergence of carbon dioxide co2 emissions in 23 countries over the period 1960 2002 for that purpose we conduct unit root testing by employing the recently developed panel stationarity test of carrion i silvestre et al carrion i silvestre j l del barrio castro t lopez bazo e 2005 breaking the panels an application to the gdp per capita econometrics journal 8 159 175 which assumes a highly flexible trend function by incorporating an unknown number of structural breaks we accommodate general forms of cross sectional dependence as well as control for finite sample bias through bootstrap methods overall our analysis provides strong evidence supporting both stochastic and deterministic convergence in co2 emissions thus confirming strazicich and list strazicich m c list j a 2003 are co2 emission levels converging among industrial countries environmental and resource economics 24 263 271 and westerlund and basher westerlund j basher s a 2007 testing for convergence in carbon dioxide emissions using a century of panel data environmental and resource economics forthcoming findings of convergence

discretionary monetary policy with costly inflation this paper considers how an output cost of inflation affects the discretionary inflation bias we show that conditions exist under which costly inflation actually increases this inflation bias

the search for a stable money demand function a survey of the post 1973 literature phe question of whether the demnand function for money is stable is one of the most important recurring issues in the theory and application of macroeconomic policy what is being sought in a stable demand function is a set of necessary conditions for money to exert a predictable influence on the economy so that the central bank s control of the money supply can be a useful instrument of economic policy as such the notion of a stable demand function appears to involve three key elements e g john t boorman 1976 p 317 and david e w laidler 1977 pp 34 35 first the demand for money relation should be highly predictable in a statistical sense as measured by the usual goodness of fit statistics precision of estimated coefficients and presumably its ability to forecast accurately out of sample second a stable demand function for money has relatively few arguments a relationship that requires knowledge about a large number of variables in order to pin it down is in effect not predictable finally the variables that appear as arguments in the function should represent significant links to spending and economic activity in the real sector in sum a stable demand function for money means that the quantity of money is predictably related to a small set of key variables linking money to the real sector of the economy the importance of a stable money demand function for monetary policy can be illustrated with the standard is lm model in which interest rates and gnp are the endogenous variables in this context a stable demand function for money translates into a well defined relationship between money interest rates and gnp

economic growth and the structure of long term development this volume collects some of the papers presented at the 82nd round table conference of the international economic association that was organised in collaboration with fondazione eni enrico mattei the book considers different approaches to the analysis of economic growth and it is organised in five parts par i is devoted to empirical evidence part ii contains six papers which present a series of models based on different approaches but with special emphasis on endogenous growth and on schumpeterian models of growth and fluctuations part iii of the book is devoted to the impact of international trade on economic development part iv examines the effects of economic development on the natural environment the final part of the book part v contains the concluding evaluations contributors p aghion r aversi d ben david g bertola o castellino f donati g dosi w easterly s fabiani c freeman r goodwin j helliwell e helpman p howitt r king m landesmann r levine s lombardini k g maler w d nordhaus l l pasinetti s rebelo a sen l soete r m solow m syrquin b verspagen s zervos

market entry and international propagation of business cycles abstract in this paper pro cyclical market entry acts as an international transmission mechanism for business cycle shocks in an imperfectly competitive dynamic equilibrium model an expansion in one open economy leads to additional business formation in a parallel large open economy through demand spillovers business formation causes a decline in markups leading to an expansion in employment production and investment in both economies the modeling of the entry decision is critical only when the entry game is modelled as sequential with incumbents enjoying a first mover advantage are markups sufficiently elastic to cause international comovement

stochastic convergence in per capita co2 emissions an approach from nonlinear stationarity analysis abstract this paper studies stochastic convergence of per capita co 2 emissions in 28 oecd countries for the 1901 2009 period the analysis is carried out at two aggregation levels first for the whole set of countries joint analysis and then separately for developed and developing states group analysis a powerful time series methodology adapted to a nonlinear framework that allows for quadratic trends with possibly smooth transition between regimes is applied this approach provides more robust conclusions in convergence path analysis enabling a robust detection of the presence and if so the number of changes in the level and or slope of the trend of the series b inferences on stationarity of relative per capita co 2 emissions conditionally on the presence of breaks and smooth transitions between regimes and c estimation of change locations in the convergence paths finally as stochastic convergence is attained when both stationarity around a trend and convergence simultaneously hold the linear approach proposed by tomljanovich and vogelsang 2002 is extended in order to allow for more general quadratic models overall joint analysis finds some evidence of stochastic convergence in per capita co 2 emissions some dispersion in terms of convergence is detected by the group analysis particularly among developed countries this is in accordance with per capita gdp not being the sole determinant of convergence in emissions with factors like search for more efficient technologies fossil fuel substitution innovation and possibly industry outsourcing also having a crucial role

critical survey endogenous growth theory a critical assessment a critical assessment is made of endogenous growth theory from the perspective of recent developments within economics as a discipline these include its increasing mathematical formalisation its focus upon microfoundations the casual use of econometrics to test models and the incorporation of factors that have traditionally been outside mainstream economics it is found that the theory focuses upon market imperfections and technological progress in a variety of ways and reconstructs their impact upon the macroeconomy as a growth rather than as a level effect whilst the growth rate is endogenised this leads to the problem of multiple equilibria and extremely complex dynamics the generalisation from exogenous growth theory is however associated with even more extreme assumptions and analytical distance from the socioeconomic processes of growth itself copyright 2000 by oxford university press

sources of international business fluctuations country specific shocks or worldwide shocks abstract this paper identifies sources of business fluctuations in a two country open economy model with the structural var method focusing on the relative importance of worldwide shocks and country specific shocks unlike previous studies which define country specific shocks as labor supply shocks this study explicitly identifies three kinds of permanent shocks worldwide shocks domestic country specific shocks and foreign country specific shocks with identifying restrictions derived from a theoretical model the main finding is that u s country specific shocks are the most important in explaining u s and foreign output fluctuations except in the short run

equilibrium dynamics in two sector models of endogenous growth abstract this paper considers two extensions of the uzawa lucas framework in our first extension physical capital is included as an input of the educational sector in our second extension leisure considerations are assumed to play a positive role in agents welfare the case with physical capital in the production of education features under standard conditions a unique steady state and thus the dynamics are qualitatively similar to those of the original uzawa lucas framework in our second model with leisure there could be a multiplicity of steady states with different rates of growth what determines here the chosen rate of growth is the initial relative amount of physical and human capital our results therefore illustrate that in a world without externalities there could coexist different long term growth rates

uncertainty and the inflation bias of monetary policy abstract the dynamic inconsistency model predicts that monetary policy will produce a positive inflation rate the introduction of multiplicative uncertainty into the model suggests that this bias towards inflation will be lower the more uncertain the effects of monetary policy

the problem of population and growth a review of the literature from malthus to contemporary models of endogenous population and endogenous growth abstract this paper deals with the evolution of the literature on the problem of population and growth from the classical period to the recent literature on endogenous growth and development the problem concerns two distinct issues 1 how to explain the observed covariation of the levels and rates of growth of per capita income and population size over time and space and 2 how to improve the human condition represented by these variables through an accommodating social policy the evolution of the literature we survey is reflected by the progressive treatment of key variables as endogenous rather than exogenous to the growth process it is also reflected by a shift from the historical concern about population explosion and its implications for growth to the more recent concern about the association between growth and population implosion in many developed countries

a rostovian model of endogenous growth and underdevelopment traps the paper presents a model which combines self sustained growth and underdevelopment traps into a common analytical framework we provide an analytical interpretations to rostow s observation that there is a decisive interval in the history of a society when growth becomes its normal condition and to the empirical evidence that some countries seem not to have achieved this stage yet the model exhibits aggregate non convexities and thresholds which separate a region where growth is solow type with convergence to a stationary steady state from a region where growth is romer type with endogenous self sustained growth in some critical stages of development there exist multiple equilibrium trajectories consistent with alternative sets of self fulfilling beliefs

total factor productivity vs realism revisited the case of the south korean steel industry this paper presents key features of the development of the south korean steel industry through the critical examination of an article by truett and truett despite their claim to exhibit realism by use of a translog cost function their methodology has strong affinities with the methods of measuring total factor productivity growth which have long been known as invalid but continue to be applied not least to the experience of east asian countries it will be argued that the theoretical and empirical flaws involved with these methods invalidate their results and corresponding policy implications above all by showing that the assumptions for their calculation do not hold in terms of the economic conditions of the industry the paper points to a different understanding of realism than that conceived by and for their study copyright 2005 oxford university press

understanding the persistence properties of international macroeconomic aggregates in this paper the ability of a two country model of growth and cycles is evaluated to explain the persistence properties of output and consumption across countries simulated output and consumption levels replicate the observed appearance of noncointegration across countries simulated output growth rates however do not explain the observed positive serial correlation of output growth rates the reallocation of resources in response to technology shocks generates a negative serial correlation for output growth rates

endogenous growth and intermediation in an archipelago economy a general equilibrium model based on the parable of an economy of many islands shows the market imperfections in the intermediation activity affect economic growth and possibly prevent take off into sustained growth the inhabitants of different islands accumulate heterogeneous assets and transportation type intermediation allows for better allocation of the productive resources the development process is accompanied by a reduction in intermediation costs which induces firms to adopt more efficient techniques and sustains economic growth a laissez faire economy suffers from two distortions the existence of market imperfections and a thick market externality

market power in banking countercyclical margins and the international transmission of business cycles abstract by introducing an imperfectly competitive banking sector into a standard two country two good rbc model with complete asset markets we study the international transmission of aggregate tfp shocks in an environment with noncompetitive financial intermediation in this model price cost margins in a global loan market are endogenous and countercyclical as a result a positive tfp shock in one country spills over to another through a reduction in the global cost of both credit and externally financed investment the quantitative analysis shows that countercyclical margins on loans play a key role in bringing the predictions of the theory closer to the observed cross country cyclical co movements of consumption employment investment and output recessions are deeper when the cost of credit rises during these economic downturns thus a financial accelerator arises in our framework unveiling the increased importance of stabilization policies in economies where margins in credit markets are countercyclical

caution and conservatism in the making of monetary policy does society benefit from the delegation of monetary policy to cautious and conservative central bankers we offer a critical view on the delegation literature and relax seemingly innocuous assumptions about uncertainty and preferences first caution improves credibility but does not obviate the need for central bank conservatism second previous models of delegation have focused on suboptimal forms of conservatism we derive optimal concepts of conservatism that mitigate or eliminate any residual problem of credibility third we rationalize why credible monetary policy may be conducive to stable inflation and output

public spending endogenous growth and endogenous fluctuations abstract this article studies indeterminacy and endogenous growth in a simple one sector model of capital accumulation endowed with inelastic labor supply in which the presence of public goods creates positive externalities both in the production and the consumption sectors because of increasing returns in the utility function the economy exhibits not only perpetual growth but also indeterminacy and therefore endogenous stochastic growth fluctuations the possibility of sunspot equilibrium growth paths is shown to be consistent with plausible parameter values journal of economic literatureclassification numbers e32 o41 h40

multiplicative uncertainty in a model without inflationary bias abstract this paper shows that an increase in the degree of multiplicative uncertainty regarding the effectiveness of monetary policy will reduce social loss when policymaker s preferences are highly uncertain this result is still valid even when there is no distortion in the market

consumption real exchange rates and the structure of international asset markets abstract international real business cycle irbc models that assume complete asset markets yield strong restrictions for consumption and bilateral real exchange rate series empirical tests with data for the us japan france uk italy canada and sweden suggest that neither the trend behavior nor high frequency movements of consumption and real exchange rates are well explained by irbc models with complete markets it appears however that high frequency fluctuations of consumption and real exchange rates are consistent with unrestricted international trade in risk free bonds

a microeconomic mechanism for economic growth this paper constructs a dynamic general equilibrium model in which economic growth is explained by the evolution of the division of labor the relationships among the accumulation of human capital the evolution of the division of labor endogenous comparative advantage trade dependence the market structure and economic growth are investigated

the limits of trade policy reform in developing countries trade reform is now raising some new issues this paper deals with three sets of questions first how can trade reform be sustained can governments convince business labor or consumers that trade reform will be lasting so as to forestall possible adverse reactions that would jeopardize the sustainability of the reform second what role should trade reform play when it is implemented in the context of macroeconomic instability are there potential conflicts between the standard desiderata for trade reform and the requirements of macro stability finally should we be worried about the consequences of trade reform in the imperfectly competitive market environments that characterize the developing economies

trade in capital goods and investment specific technical change abstract this paper studies the role of trade in capital goods and investment specific technical change in the determination of the cross country correlation of output and the volatility of the terms of trade the cross country correlation of output for g7 countries ranges from 0 42 to 0 85 and the relative volatility of the terms of trade ranges from 1 24 to 6 06 the standard model with total factor productivity change and trade in final goods only generates an average cross country correlation of 0 05 and an average volatility of 0 68 models with trade in capital goods and investment specific technical change produce an average cross country correlation of 0 71 and an average volatility of 2 81

income and co2 emissions evidence from panel unit root and cointegration tests abstract this paper re investigates the stationarity properties of per capita carbon dioxide co 2 emissions and real gross domestic product gdp per capita for 109 countries within seven regional panel sets covering 1971 2003 we apply the recent unit root test of the panel seemingly unrelated regressions augmented dickey fuller suradf test developed by breuer et al 2001 misleading inferences from panel unit root tests with an illustration from purchasing power parity review of international economics 9 482 493 2002 series specific unit root tests with panel data oxford bulletin of economics and statistics 64 527 546 the panel suradf test accounts for the presence of cross country correlations in the data and the parameters in the panel specification vary across countries more importantly this test allows us to identify how many and which members of the panel contain a unit root overall our empirical results illustrate that real gdp and co 2 emissions in these countries are a mixture of i 0 and i 1 processes and that the traditional panel unit root tests could lead to misleading inferences as well as the conduct of cointegration analysis being perhaps inappropriate the results of our analysis carry critical implications for the modeling of co 2 emissions and gdp because of the different orders of integration for the two variables

optimal public investments in education and endogenous growth optimal public investments in human capital through subsidizing private education or providing public education are considered in an endogenous growth model with externalities subsidizing private education stimulates growth improves welfare and has no distributional effect while reducing income inequality as in the literature public education hinders the growth of the average income unless externalities are strong enough and reduces the welfare of the median agent unless initial income inequality is sufficiently high societies with high income inequality may provide public education and will replace it with subsidized private education in some future periods as income converges copyright 1996 by the editors of the scandinavian journal of economics

on endogenous growth with physical and human capital this paper presents a class of models in which agents may devote part of their nonleisure activities to going to school so as to increase the efficiency units of labor they supply to the firms and the wages they receive the interaction among the technology of human capital accumulation and agents preferences will determine endogenously the economy s rate of growth given a constant returns to scale technology for physical capital accumulation we characterize the set of steady states as a ray from the origin and show the global convergence of every off balanced path to some point on this ray further properties concerning the dynamic evolution of the state and control variables around the ray of steady states are also established our analysis is useful to understand the role played by the technologies of physical and human capital in the process of accumulation and to evaluate the impact of policies geared toward attaining higher levels of capital our results highlight the importance of human capital

home production labor wedges and international business cycles non separabilities due to home production break the link between market consumption and its marginal utility and help explain several stylized facts of the open economy in an estimated two country model with complete asset markets in which home production generates a labor wedge that mimics its empirical counterpart output is more correlated than consumption across countries labor inputs and labor wedges are positively correlated across countries and relative market consumption is negatively related to the real exchange rate evidence from time use surveys corroborates some of the predictions of the model

economics imperialism and the new development economics as kuhnian paradigm shift abstract this paper addresses the evolving relationship between economics and other social sciences it sets the present intellectual scene as one in which economics imperialism is rampaging across other disciplines the designs of economics upon development studies are examined in terms of the kuhnian notion of paradigm shift thereby the conclusion is drawn of the potential prospect of open debate around the economy and development not least outside economics itself but there is danger of economics imperialism in the form of the post washington consensus foreclosing the analytical agenda at the expense of approaches based on the political economy of capitalism

endogenous fertility multiple growth paths and economic convergence abstract this paper extends the cass koopmans optimal growth model to allow for endogenous fertility choice it is shown that if agents choose their fertility rate then the net rate of return on capital marginal product of capital minus the population growth rate may not be monotonically decreasing in capital in this case multiple steady states and growth paths may emerge which can explain the persistent differentials in income between poor and rich countries as well as the existence of development miracles and disasters the paper provides also empirical evidence which supports the existence of multiple convergence groups and is consistent with the theoretical model

macroeconomic structure endogenous technical change and growth this paper shows the relevance of the macroeconomic structure that governs short term changes in aggregate demand and income distribution in the determination of long term growth rates it develops a new growth model by introducing endogenous technical change into a keynesian marxist synthesis model of accumulation and distribution this model has multiple equilibria a high growth equilibrium that is stable if rising wage share leads to an increase in investment and real wages are somewhat rigid and a low growth equilibrium that is stable under opposite circumstances based on this result the paper discusses how institutions and history matter in long term growth copyright 1994 by oxford university press

analysis of a two sector model of endogenous growth with capital income taxation this paper addresses a two sector model of endogenous growth in which one sector produces final goods and the other produces new human capital both sectors employ human as well as physical capital under constant returns to scale technologies unlike existing studies of this type of model that have mostly concentrated on steady state analysis or on numerical simulations of calibrated models this paper presents an analytical argument concerning the dynamic behavior of the growth path and the effects of capital income taxation in and out of the steady growth equilibrium it is demonstrated that the dynamic behavior of the economy and some policy effects depend heavily upon the magnitude of factor intensity used in each production sector copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

tax rate uncertainty and the sensitivity of consumption to income in an overlapping generations model abstract a well documented feature of u s data is that the aggregate consumption is a smoother process than income an overlapping generations model with a time nonseparable utility function is developed to characterize the effect of income tax uncertainty on the degree of consumption smoothness the model predicts that an increased tax uncertainty combined with tax financed production externality makes the aggregate consumption smoother for a plausible range of intertemporal substitution in consumption a calibration experiment indicates that the observed long term smoothness of aggregate consumption is consistent with the model s predicted consumption process