This paper incorporates a three-sector Dutch disease model into the overlapping generations framework of O. Blanchard (1985). It is shown that, if the extraction of natural resources is capital intensive, then a resource discovery may shift income away from labor. If this happens, then the asset...

The Heckscher-Ohlin model is incorporated into the overlapping generations framework of Blanchard (1985), and the effects of a terms of trade change on the current account are studied. As financial wealth is insurable, the rate of discount for future income from capital is smaller than the rate...

This paper studies some policy implications of the habit persistence model of Harl E. Ryder and Geoffrey M. Heal (1973) for a small open economy. It is shown that often the policy implications of the model that are consistent with the findings in the asset pricing literature are in conflict with...

This paper studies the effects of budget deficits financed by taxing corporate incomes. As households are finitely lived, transfers and taxes on personal incomes are discounted at a higher rate than the interest on government debt. As corporations are infinitely lived, taxes on corporations are...

The money in utility model is reconsidered in the presence of endogenous labour and habits. With standard assumptions about preferences and a policy rule that sets the nominal interest rate by adjusting the growth rate of money, the model exhibits superneutrality in the steady state....

In this paper we study the effects of monetary policies on employment, capital accumulation, consumption, and the term structure of interest rates in a cash-in-advance economy, where money is required for consumption expenditures. Monetary policy involves targeting the inflation rate. The...