This paper shows that in a three-sector model of endogenous growth with physical and human capital accumulation, taxation policy can generate indeterminacy under plausible parameterizations. The key for this result is that the accumulation of human capital is a non-market activity in which...

We consider a discrete-time two-sector Cobb-Douglas economy with positive sector specific external effects. We show that indetermincay of steady states and cycles can easily arise with constant or decreasing social returns to scale, and very small market imperfections. This is in sharp contrast...

This study develops an R&D-based growth model that features both vertical and horizontal innovation to shed some light on the current debate on whether patent protection stimulates or stifles innovation. Specifically, we analyze the growth and welfare effects of patent protection in the form of...

For US postwar data, the paper explains central consumption, labor, investment and output correlations and volatilities along with output growth persistence by including a human capital investment sector and a variable physical capital utilization rate. Strong internal "amplication" results from...

This paper examines the interrelationship between capital accumulation, fertility, and growth by introducing an endogenous fertility decision into Diamond's (1965) neoclassical growth model. Under the assumptions that children provide old age support and that individuals incur a variable time...

A new technology is a bold new combination of production factors that potentially yields a higher level of total factor productivity. The optimal combination of input factors is unknown when an innovation is pursued. A larger targeted innovation may require a greater change in the optimal...

A number of recent papers have investigated the growth effects of tax reforms in the context of neoclassical growth models where growth is due to human capital accumulation. Stokey and Rebelo (1995) show that the predicted growth effects disagree to a striking extent and are highly sensitive to...

A two-sector real business cycle model, estimated with postwar U.S. data, identifies shocks to the levels and growth rates of total factor productivity in distinct consumption- and investment-goods-producing technologies. This model attributes most of the productivity slowdown of the 1970s to...

We propose a simple model where large innovation waves arise from the endogenous propagation of information around sectors. Innovators of each sector invest in internal R&D and in local search for information. We show that depending on the structural parameters of the single sectors, some of the...

This paper investigates a variety of objectives that are commonly used to motivate government fiscal action. These include welfare maximization, stabilization and growth maximization. The policies are compared on the basis of their implications for welfare, volatility and growth. We show that...