This paper examines the optimal (first-best) fiscal policy in a stochastic 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 is determined by the...

We show that in a canonical one-sector AK model of endogenous growth with a generalized cash-in-advance constraint, the growth and velocity effects of money are closely related to the local stability properties of the economy's balanced growth paths. When a positive fraction (excluding 100%) of...

This paper examines the quantitative relationship between the elasticity of capital-labor substitution and the conditions needed for equilibrium indeterminacy (and belief-driven fluctuations) in a one-sector neoclassical growth model. Our analysis employs a “normalized” version of the CES...