The paper studies the dynamic macroeconomic effects of various forms of capital income taxation in a model of a small open economy with perfect mobility of financial capital and intertemporal optimization on the part of households and firms. One of the noteworthy results is that the introduction...

The paper develops a model of endogenous economic growth, where sustainable growth is driven by private capital accumulation and productive government spending on education and pollution abatement. The economy is distorted by pollution externalities in production and consumption; by taxes and...

This article deals with macroeconomic transmission effects of the imposition of tariffs in large countries under different institutional arrangements of the world economy. We employ a symmetric two-country model and study the effects of a tariff on employment, consumer prices and real net income...

This note studies the sustainability of primary budget deficits in a situation where the public sector has also incurred debt to the private sector. It shows that if the rate of pure time preference is small relative to the population growth rate, if public consumption constitutes a modest...

This paper considers the relation between the external balance and economic policy formation in the context of the Danish economy during the last three decades. The main lines of macroeconomic development, the structure of the economy and economic policy in this period are expounded, and the...

This paper studies the relation between trade policy and macroeconomic variables in a flexible exchange rate world. Applying a symmetric two-country model, we determine the effects of a tariff on the exchange rate, employment and real income at home and abroad, taking explicitly into account...

This article explores the consequences of a devaluation in the context of a ‘real’, optimizing model of a small open economy. What provides for real effects of the devaluation is the existence of nominal wage stickiness during a contract period. We show that if this contract period is...

A two-country macro model is used to analyze domestic and international effects of the imposition of tariffs. The results on the international transmission of tariffs are then utilized in setting up a tariff game under a fixed exchange rate. In this tariff game, the non-cooperative Nash and...

This paper deals with dynamic adjustment in large economies to changes in the rate of capital income taxation or in the rate of investment tax credit in one country. The framework applied in the paper is a continuous-time, overlapping generations model with two countries. It features population...

This article considers the consequences of a terms of trade deterioration in a small, open economy that imports intermediates and investment goods from abroad. We find that a positive current account effect of a permanent terms of trade deterioration is very likely. As to the effects of a...