In a second-best optimal growth setup with only factor taxes, it is in general optimal to fully replace capital by labor income taxation in the long run. We revisit this important issue by developing a human capital-based endogenous growth model with frictional labor search, allowing each firm...

This paper develops an endogenous growth model with labor market matching and technology adoption. While labor market search and entry frictions lengthen technology diffusion, exogenous technology arrival may creatively destruct jobs in the short run. Such interrelationships give rise to...

This paper develops a dynamic general-equilibrium model with production to examine the inter-relationships between the real and the financial sectors with and without credit market imperfections. Due to the moral hazard problem, credit rationing may be present, which is associated with a widened...