By allowing for investment activities by research and development (R&D) firms to prevent product obsolescence, we show that if legal patent protection is too strong, a higher R&D subsidy rate delivers insufficient investments for survival in the R&D sector, depressing innovation and growth in...

This paper proposes a test for path dependence in discrete panel data based on a characterization of stochastic processes that are mixtures of Markov chains. This test is applied to European Community Household Panel data on employment histories. The data allow to reject the null of no path...

We propose an IV panel unit root test robust to nonstationary error volatility. Its finite-sample performance is convincing even for many units and strong cross-correlation. An application to GDP prices illustrates the inferential impact of nonstationary volatility.

While most of the literature explaining the change in consumption composition has focused on the role of relative prices and non-homothetic preferences, this paper examines the importance of preference shifts. I introduce dynamics in preferences and find that they play a relevant role and that...

This paper studies the effects of educational borrowing constraints on economic growth and welfare. We consider a three-period-lived overlapping generations model in which individuals finance their educational expenditures by borrowing. We show that if the elasticity of human capital to...

This paper examines the impact of financial stress on labour productivity in two broad sectors: production and market services. The results indicate that, while both sectors are affected by financial stress, the channels through which this happens differ.

Recent evidence shows that factor shares are not constant. Consequently, growth accounting exercises rely on a false assumption and a measurement problem arises. We propose an empirical methodology to solve the measurement issue and estimate TFP growth.

I estimate a Solow model augmented with human capital in 42 countries for 1910–2000. Estimated TFP growth is 0.3%/year, and the steady-state rate for GDP/capita is 1.0%/year. Implicitly for high-income countries maintaining growth above this rate will be increasingly difficult.

This paper theoretically investigates the effect of population aging on the employment share of an elder care service industry. We show that there exists the threshold level of income elasticity of demand for the elder care service, above which population aging spurs economic growth. In a closed...

In a broad panel over the period 1970–2000 we find that approximately 40% of the international variation in capital per worker is accounted for by the cross-country variance in the relative price of capital.