The optimal reaction to a pending productivity shock of which the expected arrival time increases with global warming is to accumulate more precautionary capital to smooth consumption and to levy a carbon tax, proportional to the marginal hazard of a catastrophe, to curb the risk of climate...

We construct a simple model where political elites may block technological and institutional development, because of a ‘political replacement effect.’ Innovations often erode elites’ incumbency advantage, increasing the likelihood that they will be replaced. Fearing replacement, political...

We develop a stylized model of economic growth with bubbles. In this model, financial frictions lead to equilibrium dispersion in the rates of return to investment. During bubbly episodes, relatively inefficient investors demand bubbles while relatively efficient investors supply them. Because...

In many western democracies, political parties with extreme platforms challenge more moderate incumbents. This paper analyses the impact of economic growth on the support for extreme political platforms. We provide a theoretical argument in favor of growth effects (as opposed to level effects)...

We construct a model where the equilibrium organization of firms changes as an economy approaches the world technology frontier. In vertically integrated firms, owners (managers) have to spend time both on production and innovation activities, and this creates managerial overload, and...

This paper proposes an empirical growth model which is consistent with a stochastic steady-state labour productivity level varying over time and across countries, where the disequilibrium mechanism leading to long-run equilibrium follows a nonlinear equilibrium correction model. Using data for...

This paper examines shares of fixed capital formation in GDP and rates of economic growth for more than 100 countries over successive five-year periods between 1965 and 1985 to determine the direction of causality between them. Simple regressions and multiple regressions including several...

This paper shows that there exists a strong positive correlation between long-term growth rates and the persistence of output fluctuations in a cross section of countries. We argue that the traditional explanation of persistence, a real business cycles model with exogenous productivity shocks,...

Many observers have declared the ‘New Economy’ to be an Industrial Revolution even more important than the Second Industrial Revolution of 1860-1900, and this Paper raises doubts about this comparison. It shows that the recent acceleration in productivity growth in the US economy can be...

This paper assesses the ‘one big wave’ in multi-factor productivity (MFP) growth for the United States since 1870. The wave-like pattern starts with slow MFP growth in the late 19th century, then acceleration peaking in 1928-50, and then a deceleration to a slow rate after 1972 that returns...