The paper suggests a consistent interpretation for the much debated Z-footnote on pp. 55-56 of the General Theory and discards claims recently made in the literature concerning the importance of output heterogeneity for Keynes's macroeconomic approach.

Macroeconomic data are indispensable for modern governance, yet it is often unclear how reliable these data are. The production process of macroeconomic data inside the statistical offices is often not very transparent for the general public. Bystanders usually have no choice but to take for...

Nordhaus (2008) has developed a testing strategy for what he calls Baumol's diseases, by which name he designates a number of by-products of structural change that are unwanted from an economic policy perspective. He finds that the U.S. economy is strongly affected by the diseases. This paper...

Against the backdrop of Baumol's model of unbalanced growth, a recent strand of literature has presented models that manage to reconcile structural change with Kaldor's stylized fact of the relative constancy of per-capita GDP growth. Another strand of literature goes beyond this, arguing that...

Towards the end of 2009, the world economy was recovering from its deepest recession since the end of World War II. Most countries around the world took resort to fiscal policy in order to foster this recovery. In this paper, we first discuss the pros and cons of discretionary fiscal policy from...

The paper investigates the nexus between inventory investment and the change in aggregate production for 29 European countries over the period 2000-2009. A special interest is taken in the Great Recession of 2008/09. For most countries, a fairly uniform pattern emerges. Inventory investment is...

In a recent paper I argued that Baumol's (1967) model of unbalanced growth offers a ready explanation for the observed secular rise in health care expenditure (HCE) in rich countries (HARTWIG 2006). Baumol's model implies that HCE is driven by wage increases in excess of productivity growth. I...

The Review of Political Economy (ROPE) welcomed the year 2009 with an issue in which the first two articles use an interesting yet not very popular modeling framework, namely the aggregate demand/aggregate supply (D/Z) model from Chapter 3 of Keynes's General Theory. Unfortunately, as I intend...

A large body of both theoretical and empirical literature has affirmed a positive impact of human capital accumulation in the form of health on economic growth. Yet Baumol (1967) has presented a model in which imbalances in productivity growth between a progressive (manufacturing) sector and a...

The paper proposes a new test of endogenous vs. exogenous growth theories based on the Granger-causality methodology and applies it to a panel of 20 OECD countries. The test yields divergent evidence with respect to physical and human capital. For physical capital, the test results favor...