We study how changing sectoral composition in employment and output shares affects aggregate growth by modeling a two-sector economy with a technologically "progressive" industry, which produces for consumption and investment, and a technologically "stagnant" industry producing only for...

We show analytically that the credibility problem which has affected the European Stability Pact originates from the insufficient distinction between two reasons for having binding fiscal constraints. The first reason deals with the governments' tendency to neglect the effects of their fiscal...