terms of trade economic growth and trade patterns a small open economy case by incorporating human capital accumulation into a dynamic trade model we examine the relationship between the growth rate and the specialization pattern of a growing economy we found that as long as its autarky price differs from the world price a small open economy eventually specializes completely furthermore the impact of the terms of trade on the growth rate depends on the trade pattern specifically if a country specializes in a capital commodity the growth rate is unaffected by the terms of trade if it specializes in a consumption commodity its growth rate is significantly influenced by the terms of trade

asymmetric adjustment costs in simple general equilibrium models abstract this paper demonstrates that the introduction of asymmetric adjustment costs in a simple general equilibrium framework establishes a meaningful link between factor price determination and output determination breaking the analytically convenient dichotomy of the heckscher ohlin samuelson model the possibility of trade between seemingly similar countries that differ in their adjustment technologies is visited

a two sector model of endogenous growth with leisure externalities abstract this paper considers the impact of leisure preference and leisure externalities on growth and labor supply in a lucas 1988 12 type model as in gomez 2008 7 with a separable non homothetic utility and the assumption that physical and human capital are both necessary inputs in both the goods and the education sectors in spite of the non concavities due to the leisure externality the balanced growth path is always unique which guarantees global stability for comparative static exercises we find that small differences in preferences toward leisure or in leisure externalities can generate substantial differences in hours worked and growth which may play a significant role in explaining differences in growth paths between the us and europe in addition to the mechanisms uncovered in prescott 2004 15 relying on differing marginal tax rates on labor income our model indicates however that a higher preference for leisure or leisure externality implies less growth but also less education attainment which seems counterfactual

stability global dynamics and markov equilibrium in models of endogenous economic growth abstract this paper studies the local and global dynamics of two sector models of endogenous growth with economy wide external effects and taxes on capital and labor the local analysis classifies the parameter space depending on the number of stationary solutions and local stability of equilibria the global analysis shows that if taxes are within certain bounds and the size of the external effects on the average level of human capital is smaller than the share of physical capital the equilibrium path is monotone and therefore a continuous markov equilibrium can be constructed

religion and female educational attainment the paper reviews the literature on the education gender and religion nexuses and identifies plausible hypotheses that religion adversely affects female education the link between major religions and female educational attainment is examined using the barro lee data set for a sample of 97 countries the estimates include control variables for colonial heritage urbanization labor force participation and young adult mortality the estimates show powerful negative links between female educational attainment and the proportion of ethnoreligions hindu and muslim adherents in a country with similar results for the gender gap the paper offers some interpretative thoughts and research agendas

indeterminacy under constant returns to scale in multisector economies recently there has been a renewed interest in indeterminacy or alternatively put in the existence of a continuum of equilibria in dynamic economies that exhibit some market imperfections one of the primary concerns of this literature has been the empirical plausibility of indeterminacy which arises in markets with external effects or with monopolistic competition often coupled with some degree 10 of increasing returns

on the taxation of human and physical capital in models of endogenous growth abstract this paper studies the effects of factor income taxation and of subsidies to human capital accumulation in models of endogenous growth it examines in particular how these effects depend on the specification of the leisure activity and on the technology and tax treatment of the sector producing human capital it shows that the negative effects of factor income taxes on economic growth are stronger when the human capital sector is a market good under these circumstances a subsidy to human capital accumulation can offset the direct growth effects of labor taxation making it akin to a consumption tax the paper then briefly discusses the normative implications of the analysis for the optimal taxation of factor incomes

convergence of living standards among irish regions the roles of productivity profit outflows and demography 1960 1996 using a consistent data set this paper presents evidence for the first time on the degree of convergence of living standards among irish planning regions between 1960 and 1996 the basic decomposition of living standards into productivity and demographic factors is extended to include the income output ratio which is significant in ireland due to the presence of substantial profit outflows since the mid 1980s living standards converged strongly among regions between 1960 and 1979 but between 1979 and 1996 there was weak divergence the chief proximate cause of this reversal was the slowdown in the effect of productivity on the degree of convergence of living standards the emergence of profit outflows exerted a negative effect on living standards growth while the irish demographic dividend boosted growth but had a divergent effect on living standards growth during the 1980s and 1990s a renewed future role for regional policy focused on the major urban centres is proposed a partir d un ensemble d

two sector growth models with productive public goods equilibrium in determinacy author affiliation been lon chen institute of economics academia sinica 128 academia road section 2 taipei 11529 taiwan e mail bchen econ sinica edu tw corresponding author shun fa lee department of industrial economics tamkang university 151 ying chuan road tamsui taipei county 25137 taiwan e mail alphalee mail tku edu tw acknowledgment we are grateful to two anonymous referees and an editor for constructive comments and to participants in several workshops for valuable comments and suggestions in earlier versions of the paper 1 introductionmodels of economic growth with multiple equilibrium paths offer an explanation as to why we often observe diverse growth performances among countries with similar economic environments a central question is under what conditions is it possible to establish local indeterminacy in this paper we study a lucas 1988 human capital based growth model and investigate whether there are multiple equilibrium paths and thus local equilibrium indeterminacy in the neighborhood of a balanced growth path equilibrium indeterminacy in existing two sector human capital based growth models emerges based upon two mechanisms one of the mechanisms is differential factor tax rates initiated in the work of bond wang and yip 1996 and followed by that of raurich 2001 the other mechanism is sector specific externalities pioneered in the work of benhabib and farmer 1996 in an exogenous growth model and followed by the work of benhabib meng and nishimura 2000 and mino 2001 in endogenous growth models ben gad 2003 combined the two mechanisms these two mechanisms establish local indeterminacy when the mechanisms cause the factor intensities at the social perspective and those at the private perspective to reverse the purpose of this paper is twofold first we argue that once productive public goods are considered the two existing mechanisms are not robust in creating local indeterminacy then we take into account congestion in public services so a two sector model with the two existing mechanisms can generate local indeterminacy our purpose is motivated by the following in the existing models with sector specific externalities or distorted factor taxes there is either no government spending or if the government spending is taken into account only consumptive public spending and government transfers are considered recently a number of authors have documented the positive impact of public expenditure upon the productivity of private capital 1 when there is productive public spending the production technology is externally enhanced by the public goods productive public goods as an engine of economic growth have received much attention in endogenous growth models in particular a number of studies in this line of modeling strategy have obtained local indeterminacy 2 thus it is important to determine whether or not differential factor tax rates and sector specific externalities create local indeterminacy in models with productive public goods however as we will find the two existing mechanisms no longer create local indeterminacy in a two sector growth model with productive public goods unless the difference in the factor tax rates and the gap in the sector specific externalities are implausibly large intuitively productive public goods introduce the effects of intersectoral externalities they offset the effects of the two existing mechanisms that would have otherwise reversed the factor intensity at the social viewpoint from the factor intensity at the private viewpoint as a consequence the two existing mechanisms are not robust in the establishment of local indeterminacy in models with productive public goods this paper then introduces the congestion effect in the use of public goods an effect offsetting the effect from public spending to salvage the two existing mechanisms

equilibria under monetary and fiscal policy interactions in a portfolio choice model abstract this paper studies how the presence of income taxes changes the properties of general equilibrium models with monetary and fiscal policy interactions it is found that from a global perspective the only policy regime that leads to a unique equilibrium is one where fiscal policy is active i e the fiscal theory of the price level regime in sims 1994 from a local perspective there are three regimes in particular and relative to the previous literature following leeper 1991 a new third regime exists where a passive fiscal rule combined with a passive monetary rule can still deliver determinacy where the same area of the parameter space would lead to multiple solutions if taxes were lump sum to obtain the size of the new regime the paper characterizes analytically the extent to which tax cuts are self financing and how the distortionary tax laffer curve looks near the steady state in the new regime monetary and fiscal backstops are brought into play so as to rule out off equilibrium dynamics and inflation can temporarily increase in order to increase seigniorage revenues with this flexibility the monetary policy is consistent with the real debt remaining bounded and the arithmetic that follows is monetarist and unpleasant in the sense of sargent and wallace 1981

introduction to a general equilibrium approach to economic growth abstract endogenous growth theory has had some success in explaining the observed data related to the process of economic growth however the results of the models in this literature are typically very sensitive to their micro economic structure it is therefore important to understand how the growth process behaves under more general specifications of such features as the number of commodities the number and preferences of consumers the factors of production and the financial and information structures in other words valuable insights can be gained by integrating growth theory into the framework of general equilibrium theory the summary of the papers in this volume focuses on seven issues that are crucial to this integration and highlights the contributions of the papers to the resolution of these issues journal of economic literature classification numbers c61 d50 d90 f43 o30 o41

severance taxes and market structure in an exhaustible resource industry abstract this paper compares the effects of a severance tax on profit maximizing competitive and monopolistic firms which explore and produce an exhaustible resource the producers response to the tax are studied and the deadweight losses from the tax are calculated time paths of exploratory effort extraction and price are computed severance taxes lead both producers to reduce production and exploration and cause a shift in the time path for prices the deadweight losses from the tax are low especially in competition the losses in the monopoly case are relatively higher with the tax burden falling mainly on the monopolistic producer

human capital formation and business cycle persistence abstract in this paper we examine the role of the formation of human capital in propagating shocks over the business cycle we show that a two sector equilibrium business cycle model with human capital is able to generate persistence in the growth of output and other aggregate variables comparable to that observed in the post war us data a key feature is the relatively low elasticity of substitution between skilled and unskilled labor in the production of human capital

transitional dynamics in two sector models of endogenous growth the steady state and transitional dynamics of two sector models of endogenous growth are analyzed in this paper we describe necessary conditions for endogenous growth the conditions allow us to reduce the dynamics of the solution to a system with one state like and two control like variables we analyze the determinants of the long run growth rate we use the time elimination method to analyze the transitional dynamics of the models we find that there are transitions in real time if the point in time production possibility frontier is strictly concave which occurs for example if the two production functions are different or if there are decreasing point in time returns in any of the sectors we also show that if the models have a transition in real time the models are globally saddle path stable we find that the wealth or consumption smoothing effect tends to dominate the substitution or real wage effect so that the transition from relatively low levels of physical capital is carried over through high work effort rather than high savings we develop some empirical implications we show that the models predict conditional convergence in that in a cross section the growth rate is predicted to be negatively related to initial income but only after some measure of human capital is held constant thus the models are consistent with existing empirical cross country evidence authors

anticipated inflation in a monetary economy with endogenous growth this paper makes a new attempt to investigate the role of anticipatedmonetary growth in economic growth combining the barro 1990 rebelo 1991 type endogenous growth model with sidrauski s 1967 framework we show that the pre announcement of money supply behaviour may have significant effects on the rate of growth during the transition process the key factor indetermining adjustment patterns of the economy to anticipated monetary changes is the degree of relative risk aversion however changes in the rate of monetary growth do not affect the rate of long run growth regardless of the degree of relative risk aversion

on the diversity of growth patterns with habit formation abstract we study a case in the growth model of carroll overland and weil with habit formation that has not been examined previously we show the existence of a continuum of balanced growth paths which exhibit a rich diversity of growth patterns such as catching up overtaking or lagging behind our results are in sharp contrast to their unique balanced growth path

budget balance welfare and the growth rate dynamic scoring of the long run government budget this paper determines conditions under which a reduction in the role of government either through a tax cut alone or together with accompanying expenditure cuts will improve long run government fiscal balance for a ceteris paribus cut in the income tax rate to improve long run government balance the intertemporal elasticity of substitution must exceed unity a tax cut balanced by an expenditure cut is likely to improve the long run balance even if it does not improve the short run balance the relationship between improving the long run fiscal balance and economic welfare is also analyzed

abatement technology and the environment growth nexus with education this article challenges the conventional result that a tighter environmental tax has no long run effect on human capital accumulation in the presence of pollution arising from final output production it demonstrates that the technology used in the abatement sector determines the existence and the direction of the growth effect a tighter environmental tax rises respectively reduces human capital accumulation in the presence of pollution arising from final production if the abatement sector is relatively more intensive in human resp physical capital than final sector that result always holds for finite lifetime but for infinite lifetime it only holds when labor supply is endogenous the transitional impact of a tighter environmental policy is also investigated

stages of growth in economic development abstract the paper analyses a two sector model of endogenous growth with two common features of economic development stages of sustained growth and underdevelopment traps the model also demonstrates the transitional issues of a temporary underdevelopment trap seemingly sustainable growth and a slowdown in productivity growth the temporary underdevelopment trap occurs when an economy exhibits a regime of extensive growth i e slowly declining growth in physical capital with no growth in human capital but thereafter starts a transition to sustained growth seemingly sustainable growth happens when an economy exhibits a regime of intensive growth i e both capitals grow initially but the growth of human capital subsequently ceases and the economy eventually finds itself in a zero growth trap the model also exhibits the possibility of a slowdown in productivity growth as a temporary phenomenon during the transition from the low growth stage to the high growth stage of an economy facing a new industrial revolution

congestible public goods and local indeterminacy a two sector endogenous growth model abstract this paper shows that the congestible public goods can generate local indeterminacy in a two sector constant return human capital enhanced growth model while the productive public good exerts positive sector specific externalities the congestion effect generates negative aggregate externalities the sector specific externalities alone arising from productive public goods cannot establish local indeterminacy without the combination of negative externality in a model with social constant return technology congestible public good generates local indeterminacy if the degree of productive public good externality and the degree of congestion effect are large enough the condition for indeterminacy is independent of the factor intensity rankings the conditions are quantitatively assessed and the required parameter values for the degrees of public good externality and congestion are consistent with the estimated values in existing literature

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

dynamic analysis of an endogenous growth model with public capital this paper develops an endogenous growth model with productive public capital along with private capital in a spirit similar to that of r j barro 1990 since the authors model includes two stock variables it has transitional dynamics unlike most of the previous studies on endogenous growth including barro s where concerns are restricted to the steady state analysis first they show that the transitional path is unique and stable second the character of the transitional path is explored third the authors show that the optimal tax rate is smaller than the rate that maximizes the national growth rate with a log linear utility function copyright 1993 by the editors of the scandinavian journal of economics

indeterminacy and endogenous growth with social constant returns abstract by examining endogenous growth models with physical and human capital this paper demonstrates that indeterminacy of equilibrium may emerge even in the absence of increasing returns to scale the model we examine consists of two production sectors one produces final goods and the other produces new human capital both sectors use physical as well as human capital it is assumed that while the private technology of the representative firm in each sector exhibits decreasing returns to scale the social technologies of both sectors satisfy constant returns because of the presence of sector specific externalities we demonstrate that a small divergence between private and social factor intensity conditions generates indeterminacy of equilibrium rather easily even under constant returns intuitive implications of the source of indeterminacy and a generalization of the model are also presented journal of economic literature classification numbers d90 o40 o41