A widely cited failing of real business cycle models is their inability to account for the cyclical patterns of ?nancial variables. Perhaps less well known is the fact that the return to capital and equity are identical in the neoclassical growth model. This paper constructs a measure of the...

We develop a model of costly technology adoption where the cost is irrecoverable and fixed. Households must decide when to switch from an existing technology to a new, more productive tecnology. Using a recursive approach, we show that there is a unique threshold level of whealth above which...

We address three questions in this paper. First, what is the impact on growth of changes in flat-rate taxes when government spending on education affects private decisions to accumulate human capital? Second, are the growth effects negligible when we simultaneously change taxes and government...