In this paper, I present a multi-sectoral DSGE-model with housing, real rigidities and variable capital utilization that generates aggregate and sectoral co-movements due to sector specific shocks. Furthermore, the model accounts for two puzzles: First, residential investment correlates...

The paper combines Baumol's model of structural change with a model of aggregate demand growth in the Keynesian-Kaleckian tradition to predict the dynamics of aggregate employment. The model for the demand regime is estimated with - and Baumol's model for the productivity regime is calibrated on...

We use the two-sector specific factors model, which is known from the theory of international trade, in a growth context to describe major trends of long-run economic development. The endogenous technical progress functions establish the link between the agricultural and the manufacturing sector...

The paper formalizes the relation between flat taxes and growth when there is a competitive equilibrium tax evasion. A decentralized tax evasion service is supplied by the banking sector. The bank production function follows the financial intermediation microfoundation approach, with deposits as...

This paper examines the interrelationship between capital accumulation, fertility, and growth by introducing an endogenous fertility decision into Diamond's (1965) neoclassical growth model. Under the assumptions that children provide old age support and that individuals incur a variable time...

We use a simple endogenous growth model with productive public capital to investigate the degree to which observed fiscal policies in eight OECD countries can account for slowdowns in the growth rates of aggregate labor productivity since 1970. In model simulations, we find that none of the...

This paper develops a quantitative theoretical model for the optimal provision of public capital. We show that the ratio of public to private capital in the U.S. economy since 1925 evolves in a manner that is broadly consistent with an optimal transition path derived from a simple growth model....

For 70 years, the participants in the Cambridge capital controversy have been arguing about the wrong things––the technical aspects of capital and whether they can support the neoclassical theory of distribution beyond the case of the corn model, a single homogeneous good as both input and...

This paper augments the neoclassical growth model to study the macroeconomic effects of idiosyncratic investment risk. The general equilibrium is solved in closed form under standard assumptions for preferences and technologies. Relative to complete markets, the steady state is characterized by...