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Copyright of Papers in Regional Science is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Abstract: In this paper we construct a general equilibrium model of trade and illustrate that return to unskilled labor may be negatively correlated with the price of product it produces. Specifically, we show that greater protection for the intermediate good that uses “unskilled” labor can reduce the unskilled wages. This result has interesting political‐economic implications. [ABSTRACT FROM AUTHOR]

The paper by Lucas (1978) "Asset Prices in an Exchange Economy" initiated a paradigmatic change in the Theory of Equilibrium Pricing of Risky Assets. It was followed by several papers including those by Brock (1979, 1982), Prescott and Mehra (1980) and Donaldson and Mehra (1984) who generalize Lucas' model to a production setting. In this paper, we examine a variation of Lucas' pure exchange model. In Lucas' model the level of consumption follows a Markov process. Observing the large increases in per capital consumption in the past, we postulate that the growth rate of consumption follows a Markov process, an assumption that enables us to capture the nonstationarity in the consumption series. Our extension is particularly relevant for empiricists interested in testing consumption-based asset pricing models in the Lucas-Prescott research tradition. [ABSTRACT FROM AUTHOR]

Copyright of Papers in Regional Science is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper proposes a theoretical method to account for historical episodes of growth disparity. A numerical computation shows that the properties of the local dynamics of the proposed model are consistent with the facts indicated by selected episodes. [ABSTRACT FROM AUTHOR]

Before 2007/08, the European Monetary Union (EMU) was expected to be enlarged on schedule, but the European sovereign debt problem, triggered by the exogenous US sub-prime crisis, not only has revealed the EMU's fiscal coordination failure, but also has weakened regional financial integration. The stagnation of financial integration will therefore increase the cost of sustaining a monetary union, which in turn slows EMU enlargement and ruins the reputation of the euro. This paper aims to measure the damage to financial integration and to provide a more precise answer on real interest rate parity (RIP) convergence. Our estimation indicates that RIP between the EMU and some accession candidates is still valid after the interruptions of the financial crises. However, convergence of real interest rates cannot be achieved until 2030. This implies the EMU authority must strengthen regional financial integration to solidify the EMU and then be able to re-start enlargement. [ABSTRACT FROM AUTHOR]

This paper extends the Das (2005) model to set up an equilibrium growth model with heterogeneous labor to analyse the growth effects after trade openness. We prove that if the terms of trade large enough before opening trade, then it is more likely that opening trade would accelerate economic growth for a small open country, vice versa. [ABSTRACT FROM AUTHOR]

The papers collected in this volume were originally presented at a conference in February 2004, on the theme ‘Beyond MIRAB: The Political Economy of Small Islands in the Twenty-First Century’. Several of the papers in the collection point towards the emergence of a new three-way taxonomy of small-island socioeconomic formations, comprising MIRAB, PROFIT and SITE ideal-types. The key economic flows in the first are remittances and aid; in the second, jurisdictionally-related flows such as tax-haven and money-laundering transactions; and in the third, tourism revenues. All three ideal-types correspond to potentially sustainable temporary equilibria, but in all cases the existing set-up is path-dependent, and subject to regime switch if disturbed. Conceptualisation of the small-island world as a field of multiple equilibria and path dependence points to the future importance of event studies by island researchers. The collection includes also new research on the theory of remittances, and case studies of the MIRAB process and the transnational migrant diaspora. [ABSTRACT FROM AUTHOR]

The paper introduces differences in production and transaction conditions between countries into a model of monopolistic competition. It applies inframarginal analysis to show that, as transaction conditions are improved, the general equilibrium may jump discontinuously across different patterns of trade and economic development. A country may export a good in which it has exogenous comparative disadvantage if its endogenous comparative advantage dominates this disadvantage. Countries will choose a trade and development pattern to utilize their net exogenous and endogenous comparative advantages in production as well as in transactions. [ABSTRACT FROM AUTHOR]

This paper first notes the importance of "one-cone" versus "multi-cone" equilibria in the Heckscher-Ohlin model of international trade, then asks whether economic growth in neoclassical growth models leads toward one or the other. The one-cone equilibrium arises with internationally similar factor endowments. It has a single set (cone) of relative factor endowments, within which countries diversify and have global factor price equalization (FPE) under free trade. The multi-cone equilibrium arises with larger factor endowment differences. It has FPE within cones, but not between them. The two configurations differ in important ways. The paper examines several neoclassical trade-and-growth models, distinguished by their assumptions about saving, asking whether factor endowments converge into a single cone. None of the models suggests convergence, while some strongly imply that countries will end up in different cones. This suggests a preference for the multi-cone version of the model. [ABSTRACT FROM AUTHOR]

In this paper we show that consumption externalities reduce the degree of increasing returns needed to generate indeterminacy in a two-sector optimal growth model. In equilibrium, consumption externalities operate as if the utility function is (close to) linear. If these externalities are strong, the minimum necessary increasing returns approach zero. Therefore, this paper—in a stylized fashion—provides an example of how microbehavior, i.e. interactions at the household level, can generate aggregate instability. Consumption externalities also help to eliminate the counterfactual cyclical behavior of consumption in the two-sector model. [ABSTRACT FROM AUTHOR]

ABSTRACT Motivated by the empirical evidence on endogenous labor effort and wage differentials, this paper explores implications for distribution and growth of firms using different strategies to elicit effort from workers. The frequency distribution of effort-elicitation strategies across firms is governed by a replicator dynamic that generates wage differential as a long-run equilibrium. Although firms willing to elicit more effort have to compensate workers with a higher wage rate, a larger proportion of firms adopting such strategy will not necessarily produce a higher wage share and thereby a higher growth rate. The intuition is that, depending on the accompanying rise in labor productivity, the wage share may not vary positively with the proportion of firms paying higher wages. [ABSTRACT FROM AUTHOR]

This paper offers some theoretical and methodological observations on a model of growth and distribution, recently developed by Franklin Serrano and others and called the Sraffian supermultiplier model, in which the growth of autonomous capitalist consumption demand and distribution are exogenously given and capacity utilization is at an exogenously given "normal" level in long‐run equilibrium. First, it provides a simple long‐run equilibrium version and dynamic formulation of the model, and compares it to other models of growth and distribution using a common framework and focusing on the effect of a change in income distribution on growth. Second, it shows that the model can be modified to examine other components of autonomous demand growth, including government spending, exports, consumption by workers, and investment and technical change, and to simultaneous multiple sources of autonomous demand growth. Finally, it comments on some methodological issues concerning the model, and on its implications for the notion of long‐run equilibrium. [ABSTRACT FROM AUTHOR]

Using a multi‐region, multi‐sector dynamic model of an economy with rural–urban migration fit to Turkish data, this paper explores the evolution of each region's output and factor allocation as well as inter‐regional disparities that emerge with migration. Migration or residence decision of households is endogenous with respect to regional cost‐of‐living differentials. Results show that migration slows down and dampens the shift of labour from urban manufacturing to services, despite the increase in demand for urban services. It is also established that rural–urban migration contributes positively to growth while the reallocation of labour within each region proves to be unfavourable. [ABSTRACT FROM AUTHOR]

This paper provides new insights into the relationship between exchange rates and productivity developments for European Economies. We focus on the question whether productivity changes have a long-run impact on real effective exchange rates for a large number of European economies. Focusing on a sample period running from 1995 until 2013, we adopt a cointegrated vector autoregressive approach and distinguish between long-run equilibrium, short-run dynamics and long-run impact of shocks. Our findings show that for several industrialized economies, real effective exchange rates and labor productivity are not related over the long-run. A possible explanation for this result is that wage developments do not reflect increases in labor productivity to a large degree, which prevents a transmission to the real effective exchange rate through the price channel. The results for Central and Eastern European Countries are more encouraging since a positive impact of labor productivity on real effective exchange rate is frequently observed. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

ABSTRACT: Using cross‐country panel data over the period 1996–2012, this paper examines the impact of financial development on macroeconomic volatility using GMM estimators. In contrast to the linear relationship identified in many previous studies, we present robust evidence suggesting that the effect of financial development on macroeconomic volatility is nonlinear and U‐shaped. We also investigate the potential differences between developed and developing countries. The results of the paper add new evidence and shed interesting insights into the recent debate on the role of finance in macroeconomic fluctuations. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

It has been established under perfect competition and constant returns-to-scale that a one-sector growth model may exhibit multiple stationary equilibria and local indeterminacy when income tax rates are endogenously determined by a balanced-budget rule while government expenditures are fixed. The present paper shows that determinacy of the equilibrium trajectory is, however, generically preserved for a non-empty range of initial values of the capital stock. [ABSTRACT FROM AUTHOR]

This paper uses a new comprehensive cross-state panel for the United States over the 1945-2004 period to reassess the relationship between income inequality and economic development. By employing the pooled mean group estimator of , it detects a long-run cointegrating association between inequality and development (as well as its squared term). Moreover, their relationship is better characterized by a U shape rather than the inverted-U profile asserted by . The evidence is robust to a variety of sensitivity tests. ( JEL C14, C21, O11, O15) [ABSTRACT FROM AUTHOR]

This paper attempts to develop a model of endogenous growth with special consideration to the role of productive public expenditure in the presence of congestion effect of private capital and environmental pollution. We analyze the properties of the optimal fiscal policy in the steady-state equilibrium when the level of production of the final good is the source of emission. Government allocates its income tax revenue between pollution abatement expenditure and productive public expenditure. In the steady-state equilibrium, optimum ratio of productive public expenditure to national income is less than the competitive output share of the public input; and this ratio varies inversely with the magnitude of the emission-output coefficient. The steady-state equilibrium appears to be a saddle point; and the market economy growth rate is not necessarily less than the socially efficient growth rate in the steady-state equilibrium. [ABSTRACT FROM AUTHOR]

This paper studies firms' job creation decisions in a labour market with search frictions. A simple labour market search model is developed in which a firm can search for a second employee while producing with a first worker, and this creates the equilibrium size distribution of firms. A firm expands employment even if the instantaneous payoff to a large firm is less than that of staying small – a firm has a precautionary motive to expand its size. In addition, this motive is enhanced by a greater market tightness. Because of this effect, firms’ decisions become interdependent – a firm creates a vacancy if it expects other firms to do the same, creating strategic complementarity among firms and thereby self-fulfilling multiple equilibria. An increase in productivity can cause a qualitative change in labour market tightness and the rate of unemployment. [ABSTRACT FROM AUTHOR]

Economists frequently make judgments about economic welfare, but there is today little discussion of the foundations of welfare economics. It is assumed either that there is unanimity of interests, or that there is general acceptance of utilitarianism. This means that economics cannot address many key policy issues and that important differences in ethical views cannot be recognized. This paper argues that it is a legitimate exercise of economic analysis to examine the consequences of different ethical positions, taking case studies of employment as a macroeconomic objective, and the role of capabilities in the measurement of economic performance. [ABSTRACT FROM AUTHOR]

This paper uses a model of endogenous theft and endogenous network division of labour to formalize some of the main principles of the economics of the state and to explore related issues concerning why new constitutional rules emerge and evolve. The model suggests that fiscal competition between states facilitates important circular effects, which propel improvements in economic welfare and promote economic growth. In particular, improvements in institutional efficiency expand the demand for transactions, which in turn increases the need for further third-party protection of property rights. We illustrate our results using the growth of the state system in Western Europe. [ABSTRACT FROM AUTHOR]

This paper develops a general equilibrium model to formalize Adam Smith's insight on the relationship between the division of labor, the emergence of money, and economic progress. The model demonstrates that the division of labor is the driving force behind the emergence of money, and the use of money in turn stimulates further division of labor. It also shows that the use of money substitute can improve welfare. [ABSTRACT FROM AUTHOR]

This paper highlights the contributions in this special issue to the very large and rapidly growing research on experimental markets. It contains ten surveys of different streams of research in this area including asset markets, contests, environmental policy, frictions, general equilibrium, labor markets, multi-unit auctions, oligopoly markets, and prediction markets. [ABSTRACT FROM AUTHOR]

The purpose of the present paper is to highlight some features of global dynamics of the two-sector growth model with accumulation of human and physical capital analyzed by Brito and Venditti, which is a specialization of the model proposed by Mulligan and Sala-i-Martín. In particular, our analysis focuses on the context in which the Brito-Venditti system admits two balanced growth paths, each corresponding, after a change of variables, to an equilibrium point of a three-dimensional system, and proves the possible existence of points [ABSTRACT FROM AUTHOR]

This paper presents a New Economic Geography model of structural change, agglomeration and growth. Assuming a non-homothetic preference structure, our results show that a progressive reduction of trade costs allows the economy to pass from a pre-industrialized to an industrialized stage and then, within the latter, from a dispersed to an urbanized regime. However, the introduction of capital accumulation and the dynamic setting of our model opens the door to a richer set of implications. First, an additional stage is introduced as, for some intermediate values of trade costs, a multiple equilibria regime emerges with simultaneously stable symmetric and core-periphery equilibria. Second, the introduction of non-homotheticity introduces a new channel through which growth is affected by trade costs and agglomeration. In particular, integration is always growth-enhancing while agglomeration is growth-detrimental. [ABSTRACT FROM AUTHOR]

This paper develops an equilibrium sorting model wherein perfectly mobile agents decide their optimal residential locations, either in a clean city or in a dirty city where production takes place. While residents in a dirty city suffer a higher level of pollution, they incur less commuting cost when going to work. When workers of different abilities choose different locations in which to reside, a segregated spatial configuration emerges, where those residing in a clean city have higher working time, human capital, and income than those in the dirty city. Analytic comparative-static and numerical welfare analyses are performed. [ABSTRACT FROM AUTHOR]

We develop a general equilibrium vintage capital model with energy-saving technological progress and an explicit energy sector to study the impact of investment subsidies on equilibrium investment and output. Energy and capital are assumed to be complementary in the production process. New machines are less energy-consuming and scrapping is endogenous. Two polar market structures are considered for the energy market: free entry and natural monopoly. First, it is shown that investment subsidies may induce a larger equilibrium investment into cleaner technologies either under free entry or natural monopoly. However, in the latter case, this happens if and only if the average cost is decreasing fast enough. Second, larger diffusion rates do not necessarily mean lower energy consumption at equilibrium, which may explain certain empirical observations. [ABSTRACT FROM AUTHOR]

This article discusses Lionel McKenzie's work and influence on economics by highlighting his work on stability, comparative statics, and international trade. [ABSTRACT FROM AUTHOR]

This paper studies the emergence of developing countries from a development trap. It shows that countries whose dynamics exhibits several growth peaks can be considered as cases of equilibrium jump. Applying this criterion to a sample of 65 countries that were initially very poor in 1950, it identifies 13 such countries, called 'emerging economies'. Comparing emerging and non-emerging economies in the 1950s and early 1960s, it shows that economic take-offs starting in the 1960s can be related to health and education in the early 1950s, while other possible factors, such as savings, openness and democracy are not significant. [ABSTRACT FROM AUTHOR]

We show that a fertility rebound can occur as the female wage rate rises concomitantly with economic development. Under plausible conditions, capital accumulation raises the marginal product of labor and hence the female wage rate. Unless the economy is trapped in a lower equilibrium, the fertility rate starts to decline at a certain level of the female wage rate and then turns upward at a higher wage level, presenting a fertility rebound. For such fertility rebounds to appear without policy intervention, the availability of external child care at high female wage rates is crucially important. The external child‐care price must be lower at high female wage rates. Otherwise the fertility rate might continue to decline. [ABSTRACT FROM AUTHOR]

This paper studies the relation between changes in financial investment opportunities and changes in the macroeconomy. States variables such as the lagged production growth rate, the default premium, the term premium, the short-term interest rate and the market dividend-price ratio are shown to be indicators of recent and future economic growth. Further, the market excess return is negatively correlated with recent economic growth and positively correlated with expected future economic growth. These results offer straightforward interpretations of recent evidence on the forecasts of the market excess return by state variable via their forecasts on the macroeconomy. [ABSTRACT FROM AUTHOR]

Robbins argues that the fundamental propositions of microeconomic theory are deductions from the assumption that individuals act on consistent preferences; this ‘indisputable fact of experience’ does not need to be validated in controlled experiments. While recognising that some neoclassical pioneers based the theory on psychological hedonism, Robbins claims that his own approach of ‘pure theory’ belongs to a parallel and sounder tradition exemplified by Menger and Wicksteed. This paper argues that Robbins' methodological defence of pure theory is incoherent, and that his claim to find an intellectual lineage in the works of Menger and Wicksteed overlooks important discontinuities. [ABSTRACT FROM AUTHOR]

This paper examines Lionel Robbins' critical attitude towards formal empirical work from the standpoint of modern econometrics. It argues that his attitude towards empirical work rested on indefensible assumptions and that he failed to realise that the role he saw for empirical work undermined his belief in the primacy of economic theory. This matters because Robbins' attitudes are echoed in modern economics, best exemplified by the calibration methodology of Kydland and Prescott, which is vulnerable to similar criticisms. [ABSTRACT FROM AUTHOR]

This paper argues that cumulative causation processes are fundamental to understanding growth and development. Such processes derive from spatially concentrated increasing returns to scale including thick market effects, knowledge spillovers, sectoral and urban clustering, and self-reinforcing improvements in physical and social infrastructure. These sources of agglomeration have been extensively analyzed in the economic geography literature. They imply that spatial unevenness in economic activity and incomes is an equilibrium outcome. Growth tends to be ‘lumpy’, with some sectors in some countries growing fast while other countries lag. The policy challenge is to lift potential new centers of economic activity to the point where they can reap the productivity and investment climate advantages of increasing returns and cumulative causation. [ABSTRACT FROM AUTHOR]

This paper uses a new approach to estimate how government expenditures affect the growth rate of real GDP. They affect the growth rate through three channels - total factor productivity, investment and aggregate demand. We find that apart from government investment, all government expenditures have negative marginal effects on productivity and GDP growth. In particular, a 1 percentage point increase in the share of government consumption in GDP reduces the equilibrium GDP growth rate by 0.216 percentage points, while the same increase in government investment raises the growth rate by 0.167 percentage points. This suggests that a reallocation of 1 percentage point of government consumption to government investment can raise the growth rate by 0.38 percentage points. [ABSTRACT FROM AUTHOR]

In this paper we report the results of an experiment designed to study the behavior of a laboratory macroeconomy with two stable steady states. The economy has the structure of an optimal growth model in which resources are allocated between consumption and investment over a sequence of time periods. The economy is decentralized, with a market for capital in operation. We find that the economy often falls into the Pareto-inferior steady state, which can be viewed as a poverty trap. The initial endowment of capital stock is varied as a treatment variable in the experiment, and the economy is more likely to reach the optimal steady state when its initial endowment is high than when it is low. Organizing the economy with a central planner directing economic activity fails to induce it to reach the optimal steady state. [ABSTRACT FROM AUTHOR]

This paper develops a simple model of economic and political institutions that lead to poor aggregate economic performance. In the model economy, groups with political power, the elite, choose policies to increase their income and to directly or indirectly transfer resources from the rest of society to themselves. The resulting equilibrium is generally inefficient because of three distinct mechanisms: (1) revenue extraction, (2) factor price manipulation and (3) political consolidation. In particular, the elite may pursue inefficient policies to extract revenue from other groups. They may do so to reduce the demand for factors coming from other groups in the economy, thus indirectly benefiting from changes in factor prices. Finally, they may try to impoverish other groups competing for political power. The elite's preferences over inefficient policies translate into inefficient economic institutions. The notable exception to this general picture emerges when long-term investments are important, thus creating a commitment (holdup) problem, whereby equilibrium taxes and regulations are worse than the elite would like them to be from an ex ante point of view. In this case, economic institutions that provide additional security of property rights to other groups can be useful. [ABSTRACT FROM AUTHOR]

Most international trade models fail to account for the fact that almost all goods must pass through the distribution sector. The authors compare different approaches to modeling distribution within an Applied General Equilibrium framework and find that such modeling may significantly affect trade opening simulations. They also predict large potential gains from streamlining distribution. For instance, a 10% reduction in Japan's final goods distribution margins would benefit it as much as worldwide free trade would. They also find that, compared to trade opening, reducing margins leads to smaller inter-sectoral production shifts and thus may engender less political opposition. [ABSTRACT FROM AUTHOR]

The present paper provides a complete characterization of the turnpike property of optimal paths in the (reduced form) aggregative model of intertemporal allocation. The characterization allows one to identify precisely the bifurcation point between globally stable and cyclical long-run optimal behavior. The complete characterization result is used to evaluate several sufficient conditions for global asymptotic stability of optimal paths that have been proposed in the published literature. It is also used to examine sufficient conditions for the emergence of competitive equilibrium cycles in two-sector models. [ABSTRACT FROM AUTHOR]

The aim of this paper is to study the qualitative impact of short-run disequilibria on long-run positions. In this perspective, we refer to a classical framework. We underline that one-sector classical growth models only deal with perfectly adjusted situations (steady-state equilibria). Such models assume that short-run dynamics are neutral in the long run which means that the steady state is defined independently of the transient dynamics. In order to show that this situation is not always realized, we propose a modified version of Kurz's growth model (“Technical change, growth and distribution: a steady-state approach to ‘unsteady’ growth”, in Kurz H. D.: Capital Distribution and Effective Demand, Blackwell, Oxford, 1990, pp. 210–239) that integrates short-run disequilibria. We obtain dynamics that exhibit a multiplicity of equilibria. Therefore, short-run events can no longer be neglected, since they contribute to the emergence of the long-run equilibrium. [ABSTRACT FROM AUTHOR]

Abstract: We examine the theoretical interrelations between progressive income taxation and macroeconomic (in)stability in an otherwise standard one‐sector AK model of endogenous growth with utility‐generating government purchases of goods and services. In sharp contrast to traditional Keynesian‐type stabilization policies, progressive taxation operates like an automatic destabilizer that generates equilibrium indeterminacy and belief‐driven fluctuations in our endogenously growing macroeconomy. Unlike the no‐sustained‐growth counterpart, this instability result is obtained regardless of (i) the degree of the public‐spending preference externality and (ii) whether private and public consumption expenditures are substitutes, complements or additively separable in the household's utility function. [ABSTRACT FROM AUTHOR]

In this paper we intend to (a) show that the restriction Pasinetti imposes on the set of techniques s[sub w] < gx < s[sub c] (1) where s[sub c] and s[sub w] are the capitalists' and workers' saving ratios and g is the exogenously given growth rate, is not sufficient to ensure the existence of an equilibrium growth path, if we take into account the general case which allows for the possibility of joint production (section II); (b) take up the case where the interest rate differs from the capitalists' profit rate: in this case the Pasinetti distribution will be undetermined unless we have a theory of the rate of interest; Pasinetti assumes this last variable to be determined somewhere else in the system and makes it equal to a given proportion of the capitalists' profit rate. We will examine what features a theory of the rate of interest should have in order to close the model (section IV) and what assumptions we need to make about the "set of techniques" in order to ensure the uniqueness of the Pasinetti distribution (section III); (c) study the stability aspects of the Pasinetti process. This type of analysis has already been carried out by Pasinetti himself for the case of a constant capital/output ratio [4, pp. 275-277] and by Samuelson and Modigliani for the case of a neoclassical production function [11, pp. 281.282], but we do not know of any analysis for the general case. Finally, since throughout our paper we consider the case of a flexible capital/output ratio, while Pasinetti seems to believe that the "most reasonable assumption to make on K/Y is, after all, Harrod-Domar's original assumption that K/Y will remain constant" [8, p. 134] when the rate of profit changes, we study under which conditions this is true in the appendix following the paper. [ABSTRACT FROM AUTHOR]

This paper studies the relationship between infrastructure expenditure and endogenous growth generated by spontaneous evolution of division of labor. It identifies the necessary condition for infrastructure expenditure to take place and its equilibrium time path. Dynamic equilibrium shows that the optimal infrastructure expenditure, the size of the market network, and the level of division of labor increase concurrently. While infrastructure can promote the evolution of division of labor through reducing the unit transaction cost, the total transaction cost each consumer-producer incurs rises as the optimal income share of infrastructure expenditure increases with economic development. [ABSTRACT FROM AUTHOR]

The paper describes a dynamic general equilibrium monetary economy with technological primitives that are consistent with the possibility of asymptotic equilibrium growth. The paper focuses on the relationship between equilibrium financing constraints on investment goods, transaction costs and economic growth. A generalized growth condition is derived that involves both monetary growth rates and transaction costs. The condition is used to show that (i) although inflation taxes can potentially exert a negative influence on long-run economic growth, these growth effects cannot in general be arbitrarily large; and (ii) for some monetary growth rates, money is super neutral in contrast to the models of Stockman and Abel. Numerical work indicates that although the welfare and growth effects of decreasing nominal interest rates from a benchmark are large, the costs associated with raising nominal interest rates from benchmark are not. [ABSTRACT FROM AUTHOR]

SUMMARY S olow's famous contribution to the theory of economic growth is based on the assumption that the savings proportions are the same for all income earners. In this study this restrictive premise is replaced by the assumption that the savings proportions vary according to the different groups of income earners. This paper sets out to analyse the resultant consequences for the long-run equilibrium growth. One essential result is that both the overall savings proportion and the capital-output-ratio are flexible. Their steady-state solutions are, in contrast to the respective solutions in S olow's original paper, dependent on the form of the production function. Moreover, there can be derived certain conditions for the special long-run equilibrium of the Neo-Classical Theorem, which are implying no specific restrictions on the savings proportions of the various groups. Besides, there is shown that on these conditions not only a maximum of total consumption per man is achieved but also an equal distribution of consumption among all groups. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to derive sufficient conditions for the relative stability of the economic system in the presence of Hicks-technical progress, which may be neutral or non-neutral. To facilitate our analysis, we give a more general connotation to the equilibrium growth path by defining it as the path where the rate of growth of capital differs from the exogenously given rate of growth of labor by a constant rate, the difference being positive or negative. In this way, we show that the equilibrium growth path is stable even if capital stock grows slower than labor by a constant rate. * This paper, which was written in September 1969 while the author was Assistant Professor at Southern Illinois University, is a generalized version of our results in [2]. The financial support for this research came from a summer-grant by the Graduate School of Research at the Southern Illinois University. I am grateful to the referee for several useful suggestions. [ABSTRACT FROM AUTHOR]

In this paper, we study why the misallocation of resources across different productive sectors tends to persist over time. To this end, we propose a general equilibrium model that delivers two structural relations. On one hand, the public expenditure distribution influences the future sectoral composition of the economy. On the other hand, the distribution of vested interests across sectors determines public policy decisions. The model predicts that different initial sectoral compositions entail different future streams of public expenditure and therefore different development paths. [ABSTRACT FROM AUTHOR]