Standard growth models predict that consumption and GNP growth rates should not differ among countries when international capital markets are considered. This paper introduces a generational structure which implies that the return on human capital exceeds the return on physical capital in...

In this note, we use a technique analogous to Xie's method (1994) to solve analytically the Lucas model with externality in a specific parametric case. In particular, we characterize the shape of imbalance effects in this model. Our results are entirely consistent with the findings of the...