Shows that the standard method for estimating elasticity results in asymptotic bias and inconsistent standard errors. Uses time-series econometric techniques to provide unbiased estimates of the long-run growth potential (the long-run elasticity) and cyclical variability (the short-run...

Pecuniary externalities create third-party effects through changes in relative prices or asset prices. Unlike technological externalities, they do not misallocate resources and are necessary for the market to work efficiently. However, the political process does not differentiate pecuniary from...

The distinction between technological and pecuniary externalities, usually made in production, can also be applied to consumption. Technological externalities create resource misallocations while pecuniary externalities do not. Taking a household production approach to consumption, this paper...