Search

Abstract Across Africa there has been a growth in medium-sized farms, including in Zimbabwe following the land reform of 2000. What are the prospects of such farms driving new forms [...]

Electronic technology and capital are inextricably tied. Today more than ever, it is hard to distinguish one from the other. The predominant medium for capital transfer and accumulation, electronic technology [...]

This paper investigates the long-term effects of conditional cash transfers on school attainment and child labor. To this end, we construct a dynamic heterogeneous agent model, calibrate it with Brazilian data, and introduce a policy similar to the Brazilian Bolsa Familia. Our results suggest that this type of policy has a very strong impact on educational outcomes, sharply increasing primary school completion. The conditional transfer is also able to reduce the share of working children from 22% to 17%. We then compute the transition to the new steady state and show that the program actually increases child labor over the short run, because the transfer is not enough to completely cover the schooling costs, so children have to work to be able to comply with the program's schooling eligibility requirement. We also evaluate the impacts on poverty, inequality, and welfare. (JEL Oil, 125, J24), I. INTRODUCTION This paper examines the long-term general equilibrium effects of conditional cash transfers (CCTs) on human capital accumulation and child labor. To this end, we construct a dynamic heterogeneous [...]

The paper provides theoretical and empirical justifications for the instrumentality of foreign aid in stimulating private investment and fixed capital formation through fiscal policy mechanisms. We propose an endogenous growth theory based on an extension of Barro (1990) by postulating that the positive effect of aid mitigates the burden of the taxation system on the private sector of recipient countries. The empirical validity is based on data from 53 African countries for the period 1996-2010. While the findings on the tax effort channel are overwhelmingly consistent with theory across specifications and fundamental characteristics, those of the 'government expenditure' channel are a little heterogeneous but broadly in line with the theoretical postulations. Justification for the slight heterogeneity and policy implications are discussed. doi:10.1057/ces.2016.7; published online 17 March 2016 Keywords: foreign aid, political economy, development, Africa JEL Classification: B20, F35, F50, 010, 055, INTRODUCTION The issue of whether development assistance improves growth in recipient countries can be traced back to the two-gap model (Chenery and Strout, 1966), which to the best of our [...]

This paper examines the ongoing promotion of infrastructure and water privatization in Malaysia despite the failure to increase capital investment and improve efficiency. It locates privatization within the process of capital accumulation, with rents and rent-seeking as an integral part of this. In this context, water privatization provides opportunities for the creation of entrepreneurs through the allocation of rents in the form of water-related contracts. The paper provides preliminary evidence, drawing from privatized water and sewerage projects in the state of Selangor to illustrate how this offers rents for both bumiputera (Malay) and non-bumiputera entrepreneurs. Rent-seeking is driven by changes in social formations and specifically the emergence of a Malay middle class that needed to be politically accommodated. Keywords: Water, privatization, entrepreneurship, rent-seeking, Malaysia., 1. Introduction An ongoing puzzle with water privatization is why it continues to be promoted despite the failure to improve capital investment and efficiency (Tan 2011). This is especially the [...]

Using a spatial dynamic panel, the long-run industrial sector convergence rate across Mexico's states is found to be 2%. The model is a system-General Method of Moments with correction for spatial autocorrelation and an explicit human capital input. The significant ineguality between the richest and poorest states is caused by differences in factor accumulation. Physical capital accumulation dominates in richer states while the human capital accumulation is in poorer states. Regional ineguality is predicted to grow unless there is government intervention to address the bipolar regional divide. More investment in human capital in non-industrialized states to draw strength from Mexico's diversity is recommended. Comparative Economic Studies (2015) 57, 183-202. doi: 10.1057/ces.2014.42; published online 8 January 2015 Keywords: Mexican regional convergence, physical and human capital, spatial panel analysis JEL Classification: 040, 047, Rll, R15, INTRODUCTION Mexico has always been known as a country of great diversity in fields from literature to economics. For example, regional economic diversity within Mexico has led to the poorest [...]

The end of the convertibility regime (currency board) in 2002 in Argentina has involved meaningful changes in the economy that have had a strong impact on the performance of different industries. However, during the post-convertibility period some social and economic processes seem to have continued: despite government claims of a renewed and strong national business sector, the importance of foreign companies in the economy has not decreased. This issue is very important since foreign assets have a dominant role in capital accumulation in Argentina's economy. The aim of this paper is to investigate the continuities and ruptures in the process of denationalization of big business in Argentina based on analysis of the performance of the five hundred largest corporations in 1993-2008. El abandono del regimen de convertibilidad en 2002 implico cambios sustantivos a nivel macroeconomico que tuvieron un fuerte impacto en el desempeno de los distintos sectores de la economia argentina. Sin embargo, durante la posconvertibilidad parece haberse registrado tambien cierta continuidad en determinados procesos economico-sociales: si bien desde los elencos gubernamentales se ha reivindicado sucesivamente la necesidad de recuperar un empresariado nacional fuerte, el peso del capital extranjero entre las empresas mas grandes del pais no ha disminuido. Esto es sumamente relevante teniendo en cuenta que la Argentina es una economia dependiente y, por lo tanto, el rol del capital transnacional en su proceso de acumulacion es determinante. El objetivo del articulo es indagar sobre las continuidades y las rupturas en el proceso de extranjerizacion del gran capital en la Argentina a partir de un analisis de lo ocurrido con las quinientas empresas lideres de la economia durante el periodo 2993-2008., En los ultimos anos se han producido en America Latina procesos politicos y economicos que han contribuido a incrementar los grados de autonomia nacional, al menos respecto a lo acontecido [...]

Much political economy, Marxist and non-Marxist, maintains that unfree labour is incompatible with a fully-functioning capitalism, and that employers always seek to replace unfree workers with free equivalents. In keeping with this, cases of unfree labour encountered currently are categorised as instances of primitive accumulation. Against this view, it is argued here that the centrality of class struggle to the shaping of the accumulation process leads to the opposite conclusion. Labour-power is unfree not because capitalism is in its early or 'primitive' stage--but rather because it is mature. The importance of this distinction is that the characterisation of unfree labour as acceptable or unacceptable to capitalism in turn affects what kind of systemic transition is on the political agenda. Keywords primitive accumulation, unfree labour, capitalist restructuring, class struggle, deproletarianisation, Introduction Anyone writing about the shape of a 21st-century labour regime is faced with a rather obvious problem. On the one hand, much political economy insists that 'fully functioning' capitalist [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmateco.2010.08.021 Byline: Jonathan P. Caulkins (a), Richard F. Hartl (b), Peter M. Kort (c)(d) Keywords: Capital accumulation; Delayed response; Time-to-build; Time-to-install/deliver; Optimal control Abstract: We study delays in capital accumulation models. Our contribution is threefold. First, we identify a class of models that can be transformed into standard optimal control models without delay. Second, in the single state versions of these models the state trajectory is monotonic in the optimal solution. This is noteworthy given the common belief that adding delays facilitates oscillatory behavior of capital, output and investment. Third, we identify an equivalence result between time-to-install/deliver problems and time-to-build problems. Author Affiliation: (a) Carnegie Mellon University, Qatar Campus, Heinz College's School of Public Policy & Management, School of Information Systems & Management, 5000 Forbes Ave, Pittsburgh, PA 15213, USA (b) University of Vienna, School of Business, Economics, and Statistics, Bruennerstrasse 72, A-1210 Vienna, Austria (c) Tilburg University, Department of Econometrics & Operations Research and CentER, P.O. Box 90153, NL-5000 LE Tilburg, The Netherlands (d) Department of Economics, University of Antwerp, Prinsstraat 13, 2000 Antwerp 1, Belgium Article History: Received 25 March 2010; Revised 8 July 2010; Accepted 30 August 2010 Article Note: (footnote) [star] The authors like to thank an associate editor, two anonymous reviewers, Mauro Bambi, Raouf Boucekkine, Gustav Feichtinger, and Omar Licandro for their helpful comments.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmacro.2009.06.003 Byline: Jochen Hartwig Keywords: Human capital; Health and growth; Panel Granger-causality tests Abstract: A large body of both theoretical and empirical literature has affirmed a positive impact of human capital accumulation in the form of health on economic growth. For rich countries, however, the existing empirical evidence is mixed. This paper revisits the question whether health capital formation stimulates GDP growth in rich countries applying a new empirical methodology: the panel Granger-causality framework. The results do not lend support to the view that health capital formation fosters long-term economic growth in the OECD area. Author Affiliation: ETH Zurich, Swiss Economic Institute at ETH Zurich (KOF ETH), Weinbergstrasse 35, 8092 Zurich, Switzerland Article History: Received 17 October 2008; Accepted 8 June 2009

Specialization patterns in an open-economy two-sector growth model with endogenous capital accumulation are examined in the presence of free international lending and borrowing. Without free international lending and borrowing it is known that, whereas the less (time-)patient country decumulates real capital, the more patient country accumulates real capital and eventually specializes in a capital-intensive industry. However, free trade of international financial assets causes a dramatic change in long-run specialization patterns. In this case the less patient country may well specialize in the capital-intensive industry and the more patient country in the labor-intensive industry. JEL codes: E62, F41 Keywords: time-patience differential, two-sector growth model, specialization pattern, financial asset trade, subsistence consumption., IT HAS BEEN BELIEVED THAT in an open-economy two-sector growth model the more (time-)patient country accumulates real capital and eventually specializes in a capital-intensive industry. It is actually the case [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jinteco.2009.05.006 Byline: Nicolas Coeurdacier (a)(e), Robert Kollmann (b)(c)(e), Philippe Martin (d)(e) Keywords: Capital accumulation; International equity and bond portfolios; Capital flows; Current account; Valuation effects; Terms of trade Abstract: Despite the liberalization of capital flows among OECD countries, equity home bias remains sizable. We depart from the two familiar explanations of equity home bias: transaction costs that impede international diversification, and terms of trade responses to supply shocks that provide risk sharing, so that there is little incentive to hold diversified portfolios. We show that the interaction of the following ingredients generates a realistic equity home bias: capital accumulation and international trade in stocks and bonds. In our model, domestic stocks are used to hedge fluctuations in local wage income. Terms of trade risk is hedged using bonds denominated in local goods and in foreign goods. In contrast to related models, the low level of international diversification does not depend on strongly countercyclical terms of trade. The model also reproduces the cyclical dynamics of foreign asset positions and of international capital flows. Author Affiliation: (a) Department of Economics, London Business School, Regent's Park, London NW1 4SA, United Kingdom (b) ECARES, Universite Libre de Bruxelles, CP 114, 50 Av. Franklin Roosevelt, B-1050 Brussels, Belgium (c) Faculte de Sciences Economiques, Universite Paris XII, 61 Av. du Gen. de Gaulle, 94000, Creteil, France (d) Sciences Po, 27 rue Saint-Guillaume, 75007 Paris, France (e) CEPR, 53-5 Gt. Sutton Street, London EC1V ODG, United Kingdom Article History: Received 30 June 2008; Revised 18 May 2009; Accepted 18 May 2009 Article Note: (footnote) [star] An is posted on the corresponding author's web page. We thank Mick Devereux and two anonymous referees for helpful comments and advice. We also thank Kosuke Aoki, Matthias Doepke, Stephane Guibaud, Viktoria Hnatkovska, Mathias Hoffmann and Giovanni Lombardo for detailed and constructive discussions. For comments, we are also grateful to Luca Dedola, Pierre-Olivier Gourinchas, Harald Hau, Jonathan Heathcote, Akito Matsumoto, Werner Roeger, Alan Sutherland and Pedro Teles, and to workshop participants at IMF-JIE conference 'International Macro-Finance', AEA 2009, RES 2008, SED 2008, Bundesbank Spring conference, ESSIM (CEPR), EU Commission (DG ECFIN), Bank of Portugal, Bank of Italy, San Francisco Fed, Dallas Fed, EUI (Florence), Birkbeck, City University (London) and at the Universities of Zurich, Leicester and Gent. R. Kollmann thanks ECARES, the National Bank of Belgium and the EU Commission (DG ECFIN) for financial support. Philippe Martin thanks the Institut Universitaire de France for financial help.

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1540-5982.2009.01560.x Byline: Emily T. Cremers (1), Partha Sen (2) Keywords: F11; F43; O4 Abstract: Abstract. In the context of a two-sector overlapping-generations model it is demonstrated that a steady-state transfer paradox may arise under commodity trade with stability and without distortions or bystanders. The existence of the paradox is due to the effect of the transfer on world capital accumulation, which is shown to always (i.e., for any ranking of factor intensities and savings rates) improve the donor's terms of trade. Transfers may also improve steady-state welfare for both donor and recipient and produce paradoxical welfare results along the transition path. Abstract (Spanish): Transferts, termes d'echange, et accumulation du capital. La litterature en statique du commerce international a conclu que, en l'absence de distorsions ou de tierces parties, les mouvements des termes d'echange induits par les transferts ne peuvent pas etre suffisamment importants (quand il y a stabilite walrasienne) pour engendrer le paradoxe du transfert. On a tire la conclusion de modeles dynamiques a un secteur que le paradoxe du transfert est possible, mais en comptant sur la mobilite internationale du capital et sur les mouvements dans le niveau mondial du taux d'interet plutot que sur les prix et les marches des biens. Dans un modele dynamique a deux secteurs ou les generations se chevauchent - ce qui permet des effets a la fois statiques et intertemporels dans les termes d'echange - le commerce des biens peut engendrer un paradoxe du transfert en regime permanent quand il y a stabilite walrasienne, sans distorsions et tierces parties. L'existence du paradoxe est attribuable a l'effet du transfert sur l'accumulation du capital qui toujours (pour tout ordre des intensites de facteur et des taux d'epargne) ameliore les termes d'echange du donneur. Les transferts peuvent aussi ameliorer le bien etre du donneur et du recipiendaire en regime permanent, et produire des resultats paradoxaux de bien-etre dans le sentier de transition. Author Affiliation: (1)Department of Economics, National University of Singapore (2)Department of Economics, Delhi University

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.eeh.2009.04.004 Byline: Robert C. Allen Keywords: British industrial revolution; Kuznets curve; Inequality; Savings; Investment Abstract: The paper reviews the macroeconomic data describing the British economy from 1760 to 1913 and shows that it passed through a two stage evolution of inequality. In the first half of the 19th century, the real wage stagnated while output per worker expanded. The profit rate doubled and the share of profits in national income expanded at the expense of labour and land. After the middle of the 19th century, real wages began to grow in line with productivity, and the profit rate and factor shares stabilized. An integrated model of growth and distribution is developed to explain these trends. The model includes an aggregate production function that explains the distribution of income, while a savings function in which savings depended on property income governs accumulation. Simulations with the model show that technical progress was the prime mover behind the industrial revolution. Capital accumulation was a necessary complement. The surge in inequality was intrinsic to the growth process: technical change increased the demand for capital and raised the profit rate and capital's share. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation. After the middle of the 19th century, accumulation had caught up with the requirements of technology and wages rose in line with productivity. Author Affiliation: Nuffield College, New Road, Oxford OX1 1NF, UK Department of Economics, Oxford University, Manor Road, Oxford OX1 3UQ, UK Article History: Received 8 February 2008

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.regsciurbeco.2009.02.006 Byline: Jaime Alonso-Carrera (a)(d), Maria Jesus Freire-Seren (b)(d), Baltasar Manzano (c)(d) Keywords: Infrastructures; Dynamic general equilibrium; Regional spillovers Abstract: This paper proposes a multi-regional, general equilibrium model with capital accumulation to analyze the economic impact of the spatial distribution of public capital formation. This model is calibrated and solved by using data for the Spanish economy in order to simulate some comparative dynamic exercises of fiscal policy changes. These analyses illustrate the role that public investment plays in generating the existing imbalances in regional development. This is done by computing the spillover effects and the opportunity costs of regional distribution of public investment. Finally, two rankings of regional priorities in public investment can be derived: one based on the criterion of reducing regional disparities, and another based on an efficiency criterion. Author Affiliation: (a) Departamento de Fundamentos del Analisis Economico and RGEA, Universidad de Vigo, Spain (b) Departamento de Fundamentos del Analisis Economico and GRiEE, Universidad de Vigo, Spain (c) Departamento de Fundamentos del Analisis Economico and REDE, Universidad de Vigo, Spain (d) Facultad de Ciencias Economicas y Empresariales, Universidad de Vigo, Campus As Lagoas-Marcosende, 36310, Vigo, Spain Article History: Received 18 May 2006; Revised 12 July 2008; Accepted 19 February 2009 Article Note: (footnote) [star] This paper is part of a project co-financed by FEDER and Fundacion CaixaGalicia. We wish to thank Angel de la Fuente, Gerhard Glomm, Tim Kam, Carlos de Miguel, Farshid Vahid, and the editor and the anonymous referees of this journal for their useful comments. Of course, they should not bear any responsibility for the remaining errors. Additional financial support from the Spanish Ministry of Science and Innovation through grant BEC2008-02752, and the Spanish Ministry of Education through grants PR2006-0148 and PR2006-0149 are also gratefully acknowledged. Finally, Alonso-Carrera and Freire-Seren thank the School of Economics at the Australian National University for its hospitality during a visit where part of this research was undertaken.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmacro.2008.09.006 Byline: Hideki Nakamura Keywords: Mechanization; Dynamic changes in production functions; Micro-foundation for a CES production function; Total factor productivity Abstract: We consider an increase in the range of capital use as a form of mechanization. A constant elasticity of substitution (CES) production function is dynamically derived from Leontief production functions through the endogenous complementary relationship between capital accumulation and mechanization. This implies that a CES production function can be resolved into technological change that does not involve changes in total factor productivity. Furthermore, using the normalizing procedure of the CES production function developed by de La Grandville [de La Grandville, O., 1989. In quest of the Slutsky diamond. American Economic Review 79, 468-481], we investigate how mechanization is related to the elasticity of substitution in our endogenous growth model. Author Affiliation: Faculty of Economics, Osaka City University, 3-3-138, Sugimoto, Sumiyoshi, Osaka 558-8585, Japan Article History: Received 17 October 2007; Accepted 17 September 2008

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-6435.2009.00440.x Byline: Giacomo Degli Antoni (1) Abstract: SUMMARY Although intrinsic motivations receive increasing attention in explaining human actions, our knowledge on their causes and effects is incomplete. Quite surprisingly, the existing literature fails to consider the relationship between intrinsic motivations and social capital formation. The present paper increases the understanding on the effect of intrinsic motivations by studying the role that different motivations to volunteer have on the creation of volunteers' social capital which is intended as networks of cooperative relations. Our empirical analysis considers three indices of social capital, aimed at measuring both the quantitative (number) and the qualitative (degree of familiarity and cooperation) character of social relations, and intrinsic and extrinsic motivations to volunteer (ideal motivations, the desire to feel useful to others, the pursuit of social recognition and the desire to increase the number of acquaintances or friends). We find that the creation of social capital through participation in voluntary associations is not indifferent to the motivations which induced the volunteer to start his/her unpaid activity. In particular, we show that intrinsic motivations enable people to extend their social networks by creating relations characterized by a significant degree of familiarity. By contrast, extrinsic motivations, and in particular the decision to join an association in order to increase the number of acquaintances or friends, promote the creation of networks from a quantitative point of view, but they do not facilitate the creation of relations based on a particular degree of confidence. Author Affiliation: (1)EconomEtica, interuniversity centre of research, Bicocca University

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jeem.2008.07.011 Byline: Martin D. Smith (a), Jordan M. Slott (b), Dylan McNamara (c), A. Brad Murray (d) Keywords: Beach nourishment; Optimal rotation; Natural capital; Erosion; Shoreline stabilization; Coastal management Abstract: Beach nourishment is a common coastal management strategy used to combat erosion along sandy coastlines. It involves building out a beach with sand dredged from another location. This paper develops a positive model of beach nourishment and generates testable hypotheses about how the frequency of nourishment responds to property values, project costs, erosion rates, and discounting. By treating the decision to nourish as a dynamic capital accumulation problem, the model produces new insights about coupled economic geomorphological systems. In particular, determining whether the frequency of nourishment increases in response to physical and economic forces depends on whether the decay rate of nourishment sand exceeds the discount rate. Author Affiliation: (a) Nicholas School of the Environment, Department of Economics, Box 90328, Duke University, Durham, NC 27708, USA (b) Sun Microsystems Laboratories, Sun Microsystems, Inc. 1 Network Drive, Burlington, MA 01803, USA (c) Department of Physics and Physical Oceanography, University of North Carolina -- Wilmington, 601 South College Road, Wilmington, NC 28403, USA (d) Nicholas School of the Environment and Center for Nonlinear and Complex Systems, Box 90230, Duke University, Durham, NC 27708, USA Article History: Received 9 March 2007

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jedc.2008.09.003 Byline: Ben J. Heijdra (a)(b)(c)(d), Ward E. Romp (d)(e) Abstract: We study the effects of stylized demographic and fiscal shocks on the macroeconomic performance of an industrialized small open economy. We construct an overlapping-generations model which incorporates a realistic description of the mortality process. Agents engage in educational activities at the start of life and thus create human capital to be used later on in life for production purposes. Simple and intuitive expressions are derived which demonstrate the key economic and demographic mechanisms that are operating in the model. The engine of growth during the demographic transition is an intergenerational externality in the production of human capital. In a calibrated version of our model, we find that the effects of increased longevity on human capital formation are small whereas the reduction in fertility has a rather strong effect. Author Affiliation: (a) Department of Economics and Econometrics, University of Groningen, P.O. Box 800, 9700 AV Groningen, The Netherlands (b) Institute for Advanced Studies, Austria (c) CESifo, Germany (d) Netspar, The Netherlands (e) Faculty of Economics and Business, University of Amsterdam, Roetersstraat 11, 1018 WB Amsterdam, The Netherlands Article History: Received 27 November 2007; Accepted 26 September 2008

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jedc.2008.08.004 Byline: Sau-Him Paul Lau Abstract: In a recent paper, d'Albis [2007. Demographic structure and capital accumulation. Journal of Economic Theory 132, 411-434] shows that the effect of population growth on capital accumulation is ambiguous in overlapping-generations models with age-specific mortality rates, contrasting to the predicted negative effect in Diamond [1965. National debt in a neoclassical growth model. American Economic Review 55, 1126-1150] and Blanchard [1985. Debt, deficits, and finite horizons. Journal of Political Economy 93, 223-247]. The quantitative exercises of this paper indicate that while in principle a positive relation between population growth and capital accumulation is possible, this relation is practically always negative for industrial countries. Intuition based on capital dilution and aggregate saving effects is provided. This paper also complements d'Albis [2007. Demographic structure and capital accumulation. Journal of Economic Theory 132, 411-434] in characterizing the steady-state equilibrium in more familiar economic concepts. Author Affiliation: School of Economics and Finance, University of Hong Kong, Pokfulam, Hong Kong Article History: Received 12 January 2008; Accepted 19 August 2008

To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1468-0335.2007.00661.x Byline: LEONID V. AZARNERT ([dagger]) Abstract: This paper analyses the effect of foreign aid on population growth and human capital accumulation. Consistent with empirical evidence from sub-Saharan Africa, the model shows that foreign aid can work against its stated goal of alleviating poverty and promoting growth. Humanitarian aid fosters population growth and adversely affects the recipients' incentive to invest in human capital. The analysis suggests that foreign aid may lock a recipient economy in a low-equilibrium trap. Author Affiliation: ([dagger])Bar Ilan University, Israel Article History: Final version received 4 June 2007.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jebo.2008.04.005 Byline: Volker Bohm, George Vachadze Keywords: Capital accumulation; Existence and stability of equilibria; Portfolio choice; Poverty trap; Tangible asset Abstract: The paper develops a neoclassical growth model with capital accumulation and a retradable tangible asset in an overlapping generations framework. It analyzes its effect on the dynamics of capital accumulation. Two period lived consumers hold portfolios consisting of real capital and the tangible asset. It is shown that the possibility of trading the tangible asset as an alternative to capital may cause the coexistence of stable steady states with high and low levels of capital and with disjoint basins of attraction. Thus, the so-called poverty trap may appear purely endogenously generated as a consequence of asset trading alone. The possibility of the occurrence of the poverty trap is reduced as factors of production become more substitutable. However, the result is robust for continua of homogeneous as well as heterogeneous consumers. Author Affiliation: Department of Economics, Bielefeld University, P.O. Box 10 01 31, D-33501 Bielefeld, Germany Article History: Received 8 February 2007; Revised 17 April 2008; Accepted 18 April 2008 Article Note: (footnote) [star] This paper was written as part of the project 'International Financial Markets and Economic Development of Nations' supported by the Deutsche Forschungsgemeinschaft under contract BO 635/12-1.

In an infinite-horizon model with Marshallian time preferences, foreign aid, foreign borrowing, and domestic capital accumulation, this paper reexamines the effects of foreign aid on domestic capital accumulation and foreign borrowing. Comparative static analysis shows that a permanent increase in foreign aid leads to an increase in both long-run capital accumulation and domestic consumption, but a decrease in foreign borrowing. Short-run analysis shows that both a permanent and a temporary increase in foreign aid makes people more patient, which leads to a rise in investment and a reduction in foreign borrowing initially. JEL classification: E2; F34; F35; F43; O1; O4 Keywords: Foreign aid; Foreign borrowing; Capital accumulation

This paper reconsiders the effects of population growth on per-capita income growth within a Romerian (1990)-type endogenous growth model with human capital accumulation. One important novelty of our contribution is that in the human capital supply equation we explicitly consider the possibility that agents' investment in skill acquisition might be positively, negatively or not influenced at all by technological progress. We find that both the growth rate and the level of real per-capita income are independent of population size. Moreover, the population growth may affect or not real per-capita income growth depending on the size of the degree of altruism of agents towards future generations and on the nature of technical progress, for given agents' degree of altruism. JEL classification: Jl0; J24; O31; O33; O41 Keywords: Horizontal differentiation; Technological change; Population growth; Human capital; Endogenous growth; Scale effects

Hong Kong's linkages, which include labor, knowledge and capital, are examined and are shown to facilitate the changes in its global city status. Details on changes in Hong Kong's configuration from the 1980s to the 2000s are discussed.

Economists such as Hernando De Soto have argued that clearly defined property rights are essential to capital formation and ultimately to economic growth and poverty alleviation. This article traces two impediments to the clear definition of property rights in the African context: customary law and the status of women. Both of these issues interfere with the attempt of African countries to rearticulate property law with the goal of capital formation. Constructive attempts to define property rights must address the problem of enforcement in under-resourced environments where changes may not be welcomed. Key words property rights, law, Africa, capital formation, poverty, women

Research on the elasticity of substitution between capital and labor--[sigma]--has been proceeding for 75 years. While there is clearly a strong case for the importance of [sigma] in the analysis of growth and other economic issues, much less agreement exists on the value of [sigma]. This paper offers some perspectives on prior estimates of [sigma], emphasizing the fundamental tension between the short-run data that are available and the long-run parameter that is required. Estimates of [sigma] based on various short-run and long-run models are discussed and, while the estimates range widely, the weight of the evidence suggests a value of [sigma] in the range of 0.40-0.60. There is little evidence to sustain the assumption of a Cobb-Douglas production function. JEL classification: E22; C20 Keywords: Production; Function; Capital formation; Economic growth; Estimating long-run relations

This paper documents the diverging patterns of capital accumulation, profit rates, investment rates, capital productivity, and technological progress of China and India between 1980 and 2003. The two Asian economies have followed very different growth patterns and, today, they face different challenges. India's is how to accelerate growth, while China's policy makers debate between the need to maintain a high growth rate to generate employment and the imperative to reduce it to cool the economy. India must address impediments to investment. China must deal with the question of whether investment can continue being the main source of growth. Key words--Asia, capital accumulation, China, growth-distribution schedule, India, profit rate

The shift of the People's Republic of China to neo-liberalism and its accumulation by dispossession, by marketing previously uncommodified activities, rather than the accumulation of capital are analyzed.

The effects of consumption and production externalities on economic performance under time non-separable preferences are examined both theoretically and numerically. We show that a consumption externality alone has long-run distortionary effects if and only if labor is supplied elastically. With fixed labor supply, it has only transitional distortionary effects. Production externalities always generate long-run distortions, irrespective of labor supply. The optimal tax structure to correct for the distortions is characterized. We compare the implications of this model with those obtained when the consumption externality is contemporaneous. While some of the long-run effects are robust, there are also important qualitative and quantitative differences, particularly along transitional paths. JEL classifications: D91; E21; 040 Keywords: Time non-separable preferences; Consumption and production externalities; Capital accumulation; Optimal tax policy

A study on the impact of providing more public goods by a neighbor country on public capital aggregation is presented.

A bio-economic model is used to investigate capital accumulation by fishery economies.

We set out a framework for measuring the adequacy of saving in the United Kingdom by assessing the absolute level of savings based on individual preferences of different ages. We [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ejor.2004.07.070 Byline: Gustav Feichtinger (a), Richard F. Hartl (b), Peter M. Kort (c)(d), Vladimir M. Veliov (a) Keywords: Economics; Optimal control; Investment analysis; Vintage capital stock Abstract: In standard capital accumulation models all capital goods are equally productive and produce goods of the same quality. However, due to technological progress, in reality it holds most of the time that newer capital goods are either more productive (process innovation) or produce goods of better quality (product innovation). Implications of process innovation for the firm's investment policies are investigated while the output price development is subject to a business cycle, and a given generation of capital goods gets more productive over time due to learning. The problem is turned into an optimal control model that distinguishes the vintages of capital goods, and where, unlike most of the recent contributions, it is possible to keep on investing in older technologies. It is shown that (i) learning is one of the reasons why a firm may invest in old technologies even when apparently superior technologies are available, (ii) investments in machines of a given age increase more over time under faster technological progress, (iii) under faster technological progress investments are more vulnerable to output price developments, and (iv), on average, machines are older during recessions. In deciding whether to invest in newer or older capital goods, also the lower productivity due to aging versus differences in cost of discounting and acquisition have to be taken into account. Author Affiliation: (a) Institute for Econometrics, OR and Systems Theory, Vienna University of Technology, Argentinierstr. 8, A-1040 Vienna, Austria (b) Institute of Management, University of Vienna, Brunnerstrasse 72, A-1210 Vienna, Austria (c) Department of Econometrics and Operations Research and Center, Tilburg University, P.O. Box 90135, 5000 LE Tilburg, The Netherlands (d) Department of Economics, University of Antwerp, Prinsstraat 13, 2000 Antwerp 1, Belgium Article History: Received 15 July 2003; Accepted 26 July 2004 Article Note: (footnote) [star] This research was partly supported by the Austrian National Bank (ANB) under grant No. 8466-OEK.

Impacts of land tax incidence on capital formation, national income, foreign investment and consumption are analyzed.

The involvement of firms in capital structure rebalancing by providing room for high adjustments is examined, by focusing on corporate financial policy and adjustment costs.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jdeveco.2004.11.007 Byline: Fu-Sheng Hung Keywords: Asymmetric information; Credit rationing; Adverse selection; Development trap Abstract: A simple model is developed to evaluate the roles of credit rationing and government policies of financial repression in the process of capital accumulation. In the model, credit rationing on both investment and consumption loans decreases as capital accumulates but increases as the government imposes policies of financial repression to a greater extent. While a reduction in credit rationing on consumption loans impedes capital accumulation, such a reduction on investment loans facilitates it. We find that developing countries may be trapped at a low-capital-stock steady state while developed countries converge to a high-capital-stock steady state. Instead of adopting policies of financial liberalization, interestingly, this paper finds that policies of financial repression may enable developing countries to escape the development trap. Author Affiliation: Department of Economics, National Taipei University, 67, Sec. 3, Ming-Shen E. Rd., Taipei 104, Taiwan, R.O.C. Article History: Accepted 1 November 2004

The analysis of two different capital accumulation games and their corresponding equilibrium, with reference to an economy with a single stock are furnished.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jebo.2005.04.004 Byline: Engelbert J. Dockner (a), Kazuo Nishimura (b) Keywords: Non-concave production function; Capital accumulation; Open-loop Nash equilibrium; Markov perfect equilibrium Abstract: We consider an economy with a single capital stock that two agents strategically exploit by choosing a consumption profile over an infinite time horizon. We analyze two different games and their corresponding equilibria. In one game firms are able to pre-commit and choose simple time functions as their strategies. In the other game agents are assumed to employ Markov strategies. It turns out that in the case of pre-commitment there exists a threshold level of the capital stock such that if the initial stock is above this threshold, equilibrium consumption converges to the efficient steady state while if the initial condition is below it, the capital stock converges to zero. In case of the Markov equilibrium there exists a unique interior steady state that is globally stable. Author Affiliation: (a) Department of Finance, University of Vienna, Brunner StraAe 72, 1210 Vienna, Austria (b) Institute of Economic Research, Kyoto University, Yoshidahonmachi Sakyoku, Kyoto 606-8501, Japan

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jdeveco.2004.03.003 Byline: Hiau Looi Kee (a), Hian Teck Hoon (b) Keywords: Endogenous natural rate of unemployment; Wage bargaining; Specific-factors model; Stolper-Samuelson effect; Rybczynski effect Abstract: This paper studies the factors responsible for the secular decline of Singapore's unemployment rate over the period 1966-2000 in an environment of low and stable inflation rates. We introduce wage bargaining and unions into a specific-factors, two-sector economy with an export sector and a non-tradable sector to obtain an endogenous natural unemployment rate. Increases in the relative export price and capital stock in the export sector are predicted to reduce structural unemployment. These hypotheses could not be rejected based on structural estimations and co-integration regressions. Empirically, capital accumulation in the export sector explains most of the decline in Singapore's unemployment rate. Author Affiliation: (a) Development Research Group-Trade, The World Bank, 1818 H Street N.W., Washington, DC 20433, USA (b) School of Economics and Social Sciences, Singapore Management University, 469 Bukit Timah Road, Singapore 259756, Singapore Article History: Received 1 August 2002; Accepted 1 March 2004 Article Note: (footnote) [star] The authors thank the two anonymous referees for their detailed comments on an earlier draft of this paper. They are also grateful to Marcelo Olarreaga, David Tarr, and seminar participants at the University of California at Davis and the World Bank for their useful comments. Lin Yeok Tan provided useful guidance on empirical matters in the early stage of this project for which the authors are very grateful. They also acknowledge the financial support given by the Singapore Management University under its research collaboration scheme. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors, and do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent.

This paper analyzes the effects of fiscal policies in a non-scale growing economy with public and private capital. The equilibrium dynamics are characterized and we contrast the dynamic effects of government expenditure on investment and expenditure on consumption under four alternative modes of tax financing. Most of our attention focuses on the numerical simulations of a calibrated economy. The results emphasize the lengthy transition periods, which implies that policies have sizeable level effects, leading to substantial welfare effects, even though long-run growth rates are unaffected. The paper highlights the intertemporal dimensions of fiscal policy and the tradeoffs these involve for economic performance, especially growth and welfare. JEL code: E62, O41, H62 Keywords: fiscal policy, capital accumulation, economic growth., AN INITIAL ATTRACTION OF endogenous growth models was that they assigned a key role to fiscal policy as a determinant of long-run economic growth. However, these models have several shortcomings, [...]

This paper examines the fundamental effects of bank capital requirements on the loan transmission mechanism and the scale and mix of bank deposit liabilities and equity. We focus on the role of short- and long-run adjustments, in which the driving 'fundamentals' for the banking sector are the risk-free interest rate determined by monetary policy makers, term-structure risk, the riskiness of non-bank debt, and the cost structure of banks. Within this framework, we show that risk-based capital standards change basic short- and long-run loan-market outcomes, relative to the outcomes under either non-risk-based capital standards or no capital requirements. Moreover, we show that non-risk-based standards primarily influence the structure of bank liabilities. JEL classification: E51; E44; G28 Keywords: Capital requirements; Monetary transmission mechanism

All that the possessor of the luxury desires, is, to have a means of showing that he has acquired the command of a certain amount of the exertions of other [...]

The effect of endogenous mortality on capital accumulation is analyzed in an overlapping generations economy, and the effect of mortality risk on educational investment is examined. Thus, attempts are made to examine to consider the ways better health, by improving longevity and reducing mortality risks, can be conducive to growth and development. It is suggested to use cross-country evidence and more sophisticated econometric methods to quantify the importance of health.