There are substantial differences in output per worker across states that have persisted over time.  This study demonstrates that in the context of a neoclassical growth model, differences in marginal tax rates on income from capital investment, capital ownership, and consumption will lead to...

In this paper, we assume away standard distributional and static-efficiency arguments for public health, and instead, seek a dynamic efficiency rationale. We study a lifecycle model wherein young agents make health investments to reduce mortality risk. We identify a welfare rationale for public...

This paper examines the effects of international income transfers on capital accumulationand welfare in a one-sector overlapping generations model. It is shown that a strong form ofthe transfer paradox – in which the donor country experiences a welfare gain while therecipient country...

This paper explores the role of arbitrary assumptions regarding dimension and thetradeability of capital in neoclassical growth models. It is shown that international marketsfor physical and financial capital are required to reproduce the competitive world growthpath only when the number of...

This paper examines the dynamic effects of international commodity trade by mergingtwo benchmark environments, namely, the static factor endowments model and theneoclassical growth model. Two main questions are asked. First, how does commoditytrade affect the capital-accumulation paths of two...

In this paper, we assume away standard distributional and static-efficiency arguments for public health, and instead, seek a dynamic efficiency rationale. We study a lifecycle model wherein young agents make health investments to reduce mortality risk. We identify a welfare rationale for public...

Rejuveniles are "grown-ups who cultivate juvenile tastes in products and entertainment". In this note, we study a standard AK growth model of overlapping generations populated by rejuveniles. For our purposes, rejuveniles are old agents who derive utility from "keeping up" their consumption with...

In this paper, we study a decentralized monetary economy with a specified set of markets, rules of trade, an equilibrium concept, and a restricted set of policies and derive a set of equilibrium (monetary) allocations. Next we set up a simpler constrained planning problem in which we restrict...

Faced with real and nominal shocks, what should a benevolent central bank do, fix the money growth rate or target the inflation rate? In this paper, we make a first attempt at studying the optimal choice of monetary policy instruments in a micro-founded model of money. Specifically, we produce...

The Friedman rule, a widely studied prescription for monetary policy, is optimal in Townsend's turnpike model of money; it is not so in the overlapping generations version of his stochastic relocation model of money. We investigate these monetary models in the light of this disparity. To that...