Endogenous demand composition across sectors due to income elasticity differences, or Engel's Law for brevity, affects (i) sectoral compositions in employment and in value‐added, (ii) variations in innovation rates and in productivity change across sectors, (iii) intersectoral...

This paper demonstrates that an optimizing model of a monetary economy can produce perfect foresight equilibria in which the price level fluctuates forever. Cyclically or chaotically fluctuating equilibria are more likely to exist when the rate of money supply growth is high. Furthermore, the...

When do dynamic nonconvexities at the disaggregate level translate into dynamic nonconvexities at the aggregate level? The authors address this question in a framework where the production of differentiated intermediate inputs is subject to dynamic nonconvexities and show that the answer depends...

This paper investigates the effects of financial market globalization on the inequality of nations. The world economy consists of inherently identical countries, which differ only in their levels of capital stock. Each country is represented by the standard overlapping generations model,...

An endogenous growth model is developed, where the balanced growth path is unstable and the economy achieves sustainable growth through cycles, perpetually moving back and forth between two phases. One phase is characterized by higher investment, no innovation, and a competitive market...