The optimal discretionary policy rule in the New Keynesian forwardlooking model under the hypothesis of rational expectations responds only to fundamental shocks. This leads to indeterminacy of equilibria and E-unstability of the MSV REE. The outcome can be improved by responding to private...

This paper studies the optimal taxation structure and public maintenance spending in an endogenous growth model where public maintenance spending effects the efficiency of public and private capital. Private firms also spend on maintenance, which increases the effieicieny of private capital and...

This paper investigates the nature of nonlinearities in the term structure using the flexible approach to nonlinear inference. The paper reports clear evidence of nonlinearity, in contrast to the affine term structure model and consistent with recent claims in the literature. We find that there...

Existing theoretical analyses have shown that if policy variables affect investmentdecisions in either physical or human capital then an increase in policy variability results in higher trend output growth as individuals respond to higher uncertainty with a precautionary increase in these types...

This paper presents a simple stochastic growth model in which productivity improvements are the result of both internal (deliberate) and external (serendipitous) learning behaviour. The model is used to illustrate how these different mechanisms of endogenous technological change can lead to...