This paper presents a re-interpretation of a New Keynesian model with capital, where zero long-run output gap restriction is eliminated and a certain type of assumption regarding risk-less nominal interest rate is adopted

What determines the direction of technological progress is one of the central questions that economics needs to answer. By introducing a small but fundamental generalization of Acemolgu (2002) the current paper points out the key determinants of that direction. The extended model argues that...

This note proves that unless the amount of scientists S= s_K/η_L, the proposition 15.12 in Acemoglu (2009) does not hold. Because this is an extremely restrictive requirement, it is not suitable as a proof of why the technological progress must be labor-augmenting on the BGP

This paper develops a new approach, termed as the stock approach, to calculate the steady-state output loss caused by public debt in neoclassical growth models. The novelty of our stock approach is that it provides a closed-form solution to the steady-state output-debt relationship. The main...

This paper uses a new data set for cumulative national investment in formal schooling and a new instrument for schooling to estimate the national return on investment in 61 countries. These estimates are combined with data on the private rate of return on investment in schooling to estimate the...

This paper assesses productivity trends in Canada vis-a-vis the United States from two perspectives. The first one is based on estimates of total factor productivity. The second one decomposes productivity growth into two sources: investment-specific technical change, associated with...

This paper provides an explanation for the secular increase in the price of services relative to that of manufactured goods that relies on capital accumulation rather than on an exogenous total factor productivity growth differential. The key assumptions of the two-sector, intertemporal...

Europe is faced with serious problems of slow growth and little employment creation. Are the two problems related at all? Our proposed answer is: yes, they are. Building on Daveri and Tabellini (1997), we developed an infinite-horizon model with endogenous growth due to learning-by-doing and...

We develope a growth accounting method using the whole neoclassical growth model. We obtain three primary findings from our analysis of the U.S. economy during 1954--2017. First, the efficiency wedges in the entire period accurately account for the evolution of U.S. productivity and labor share....

This paper identifies a new mechanism leading to inefficiency in capital reallocation at theextensive margin when an economy experiences a sectoral boom. I argue that imperfectionsin the financial market and capital barriers to entry in the booming sector create amisallocation of managerial...