This paper investigates whether the external consumption habit can be a source of indeterminacy in a one-sector growth model when the labor supply is elastic. When there is a proper habit effect with a positive intertemporal elasticity of substitution, we find that the model exhibits...

The past two decades have witnessed economic growth differentials among countries in East Asia and Latin America. In this paper we argue that the degree of openness due to government policies in both areas may be an important factor yielding this result. We construct a simple model to highlight...

Evidence indicates that consumer durables are more flexibly priced than nondurable goods and services. In otherwise standard two-sector neoclassical sticky-price models with flexible durable prices, following monetary tightening, nondurables decrease but consumer durables increase. Friction in...

This paper studies the optimal factor tax incidence in a neoclassical growth model with a given share of government expenditure in output. In the Ramsey planner’s optimization, the effect of next period’s capital on government expenditure equals the given share of the marginal product of...

This paper considers leisure externalities in a Lucas (1988) type model in which physical and human capital are necessary inputs in both sectors. In spite of a non-concave utility, the balanced growth path is always unique in our model which guarantees global stability for comparative-static...

This paper studies the optimal factor tax incidence in a standard two-sector, human capital-based endogenous growth model elucidated by Lucas (1988). Capital income taxes generate dynamic inefficiency for capital accumulation and labor income taxes create dynamic inefficiency for human capital...

Many authors have estimated and found that the productivity growth in agriculture was higher than that in non-agriculture in today’s richest countries. Several papers suggested that growth in agricultural productivity was essential for today’s richest countries to take off early. However,...

Human Capital, Trade and Public Policy in Rapidly Growing Economies argues that only two centuries ago, no society had ever enjoyed sustained growth in living standards. The contributors to this book aim to discover why the world today exhibits a predilection for perpetual self-improvement. In...

Rising relative wages between skilled and unskilled workers in developed countries has been a popular subject of recent studies. This paper analyzes Taiwan, a semi-developed economy, where the relative wage reveals a declining trend since the mid-1980s. The authors study the role of...