More advanced technologies demand higher degrees of specialization - and longer chains of production connecting raw inputs to final outputs. Longer production chains are subject to a "weakest link" effect: they are more fragile and more prone to failure. Optimal chain length is determined by the...

This paper presents evidence that the spread between the marginal product of capital and the return on financial assets is mich higher in poor than in rich countries. A model with costly intermediation is developed. In this economy, individuals choose at each instant whether to work or to...

This paper studies a complete-market version of the neoclassical growth model, where agents face idiosyncratic shocks to eearnings. We show that if agents possess identical preferences of either the CRRA or the addilog type, then the heterogeneous-agent economy behaves as if there was a...

This paper investigates the factors that have shaped the demographic transition in a number of European countries (Sweden, England, and France) since the mid 18th century. The analytical framework is a version of the neoclassical growth model with dynastic preferences calibrated to match the...

Over the last fifty years there have been large secular increases in educational attainment and R&D intensity. The fact that these trends have not stimulated more rapid income growth has been a persistent puzzle for growth theorists. We construct a model of endogenous economic growth in which...

It is often assumed that wedges evolve according to VAR(1) in the applications of business cycle accounting (BCA). However, recent research finds that the wedges have no VAR(1) representation in many dynamic stochastic general equilibrium (DSGE) economies, and that there might be a...

In this paper, I extend the Barro-Becker model of endogenous fertility to incorporate specific fiscal policies and use it to study the effects of the fiscal policy changes following WWII on fertility in the United States. The US government went through large changes in fiscal policy after the...

We study the welfare implications of uncertainty in business cycle models. In the modern business cycle literature, multiplicative real shocks to production and/or preferences play an important role as the impulses that produce aggregate fluctuations. Introducing shocks in this way has the...

A dynamic general equilibrium model is constructed to examine the impact of mass immigration on capital accumulation in life-cycle economies. The model is calibrated to match Canadian demographic characteristics over 1861-1913. This was a period when Canada experienced a dramatic shift in...

Despite being the standard growth model for several decades, little is actually known analytically about the dynamic properties of the neoclassical Ramsey-Cass-Koopmans growth model. This papers derives analytically the properties of the endogenous savings rate when technology takes the Constant...