In this paper we show that the R&D effort of a country and its economic growth are highly correlated. In order to analyze this relationship, we study the nature of the researching activity. In particular, we focus on the following characteristics of research: the inherent uncertainty of...

In this paper we claim that capital is as important in the production of ideas as in the production of final goods. Hence, we introduce capital in the production of knowledge and discuss the associated problems arising from the public good nature of knowledge. We show that although population...

We introduce wage setting via efficiency wages in the neoclassical one-sector growth model to study the growth effects of wage inertia. We compare the dynamic equilibrium of an economy with wage inertia with the equilibrium of an economy without wage inertia. We show that wage inertia affects...

We introduce wage setting via efficiency wages in the neoclassical one-sector growth model to study the growth effects of wage inertia. We compare the dynamic equilibrium of an economy with wage inertia with the equilibrium of an economy without it. We show that wage inertia affects the long run...

The purpose of this paper is to introduce a noncompetitive labor market and unemployment into the growth models with exogenous saving rates found in economic growth textbooks (SalaiMartin, 2000; Barro and SalaiMartin, 2003; Romer, 2006). We first derive a general framework with a neoclassical production...