Endogenous time discounting is introduced in a two-period human-capital-driven growth model: subjective discount rate depends upon the level of human capital. This assumption accords strongly with the micro-level evidence. In the model an individual optimizes consumption over two periods. Low...

Do asset prices affect real activity? This question has taken on a new importance in recent years, as asset values first surged at the end of 1990s and, thereafter, dramatically retreated. This report reviews the available theoretical and empirical evidence regarding asset price and wealth...

Technological progress has long been posited to be crucial in a country's economic growth. This paper argues that coordination failure in a country's new technology investment can be one of the barriers in a country's capital accumulation and economic growth. The global game established by...

This paper is dedicated to the empirical exploration of the welfare effect of expectations and progress per se. Using ten waves of the Russian Longitudinal Monitoring Survey, a panel household survey rich in subjective variables, the analysis suggests that for a given total stock of...

This paper discusses a two-sector neoclassical overlapping generationseconomy with intermediate and final goods in the spirit of Romer(1990). The risk averse agents engage in one of two alternative occupations:either firm-ownership in the intermediate goods sector, characterizedby monopolistic...

Endogenous time discounting is introduced in a two-period human-capital-driven growth model: subjective discount rate depends upon the level of human capital. This assumption accords strongly with the micro-level evidence. In the model an individual optimizes consumption over two periods. Low...

This paper is dedicated to the empirical exploration of the welfare effect of expectations and progress per se. Using ten waves of the Russian Longitudinal Monitoring Survey, a panel household survey rich in subjective variables, the analysis suggests that for a given total stock of...

An optimal education subsidy formula is derived using an overlapping generations model with parental altruism. The model predicts that public education subsidy is greater in economies with lesser parental altruism because a benevolent government has to compensate for the shortfall in private...

This paper analyzes growth and welfare effects of income taxation in a stochastic endogenous growth model with externalities in human-capital accumulation. The government participates in individual income risks by the collection of a flat-rate income tax that affects the mean and the variance of...

What is an optimal or a sustainable external debt - for a country, region or sector? How should one monitor and evaluate debt to preclude a crisis? We use stochastic optimal control/dynamic programming to derive an optimal debt. The deviation of the actual from the optimal will serve as a...