We show that a one-sector AK model of endogenous growth with the most generalized cash-in-advance constraint is able to account for (i) the observed long-run negative relationship between the nominal growth rate of money and the income velocity of money, (ii) the empirically ambiguous effect of...

We develop a one-sector endogenous growth model in which renewable natural resources are both a factor of production and measure of environmental quality. Along the balanced growth path, sustained economic growth and a non-deteriorating environment are shown to coexist. Moreover, steady-state...

This paper examines the optimal (first-best) fiscal policy in a stochastic, infinite-horizon representative agent model that exhibits a ¡°keeping up with the Joneses¡± utility function and imperfectly competitive product markets. We find that the optimal labor tax is a constant, whose sign...

We show that in an AK model of endogenous growth with CRRA specifications for both private and public consumption goods, income inequality exerts theoretically ambiguous effects on the optimal capital tax rate and the economy¡¯s growth rate. In a calibrated version of the model, we find that...

We examine the theoretical interrelations between progressive income taxation and macroeconomic (in)stability in an otherwise standard one-sector real business cycle model with utility-generating government purchases of goods and services. When private and public consumption expenditures are...

This paper quantitatively examines the long-run macroeconomic effects of resource misallocation in an otherwise standard one-sector neoclassical growth model with heterogeneous firms being subject to progressive taxation as well as endogenous entry and exit decisions. Under a progressive fiscal...

We show that the steady-state optimal tax on capital income can be negative, positive, or zero in a neoclassical growth model that allows for imperfectly competitive product markets. The sign of the optimal tax rate depends crucially on (1) the degree of monopoly power, (2) the extent to which...

We examine the quantitative implications of government fiscal policy in a discrete-time one-sector growth model with a productive externality that generates social increasing returns to scale. Starting from a laissez-faire economy that exhibits an indeterminate steady state (a sink), we show...