The elasticity of substitution between oil and capital is a key parameter when researchers analyze the effect of oil shocks on the economy by using dynamic general equilibrium models. This paper estimates the elasticity of substitution in the U.S. economy, which is consistent with a large class...

The Japanese government has amassed a huge amount of gross public debts over the past several decades. However, previous empirical works dealing with vector auto-regression (VAR) have not considered the effect of debt on fiscal policy and the macro economy. In this paper, we incorporate debt...