In this paper we analyse the stabilisation properties of distortionary taxes in a New Keynesian model with overlapping generations of finitely-lived consumers. In this framework, government debt is part of net wealth and this adds a number of interesting channels through which fiscal policy...

This paper extends a Real Business Cycle model to an economy in which monopolistic competitive firms’ technology is subject to idiosyncratic and common shocks. The value of future technology rents drive stock market valuation. We study how the arrival of new information about future...

Although the real exchange rate - real interest rate (RERI) relationship is central to most open economy macroeconomic models, empirical support for the relationship is generally found to be rather weak. In this paper we reinvestigate the RERI relationship using bilateral real exchange rate data...

In the traditional literature on the Lucas-Uzawa model, it is proved that in the neighborhood of the long-run balanced growth path, human capital stock grows at a rate greater than its long-run counterpart when the ratio physical to human capi- tal is above its long run value if and only if the...

In this paper we examine the local determinacy conditions for three monetary policy regimes in a business cycle model with staggered price setting. The central bank either controls the nominal interest rate, the money growth rate, or it conducts open market operations and controls the...

This paper searches for a general equilibrium model of optimal growth and endogenous fiscal policy with the aim of explaining the interaction between private agents and fiscal authorities in the U.S., West Germany, Japan and the U.K. over the period 1960-1996. Our search is conducted in the...

The concept of convergence is extended to non-income components of human development index and the index itself. Evidence of weak absolute convergence is found over 1975-2001. The results are robust and verified by various conditional ß-convergence models and also supported by the evidence of...

We study a Ramsey problem in in¯nite and continuous time and space. The problem is discounted both temporally and spatially. Capital flows to loca- tions with higher marginal return. We show that the problem amounts to optimal control of parabolic partial differential equations (PDEs). We rely...