In this paper we use the insights of the stochastic general equilibrium growth model to help understand the effects of risk on the real, risk adjusted return to capital, capital flows, exchange rate policy, and economic growth in two Pacific Basin economies, Mexico and Indonesia, over the period...

An important implication of "new growth" models is taht they exhibit "scale effects", meaning that variations in the levels of key variables such as the investment rate, research effort, and policy variables (tax rates) exert permanent influences on national growth rates.

An important implication of "new growth" models is taht they exhibit "scale effects", meaning that variations in the levels of key variables such as the investment rate, research effort, and policy variables (tax rates) exert permanent influences on national growth rates.

While the theoretical literature on Foreign Direct Investment (FDI) focuses largely on movements in capital and firm specific technology, recent empirical evidence emphasizes primarily the local human capital necessary to absorb FDI technology. We examine how human capital affects FDI and add a...

While the theoretical literature on Foreign Direct Investment (FDI) focuses largely on movements in capital and firm specific technology, recent empirical evidence emphasizes primarily the local human capital necessary to absorb FDI technology. We examine how human capital affects FDI and add a...

The effects of open market operations and long versus short bond financing on risk in financial markets in a stochastically growing economy are studied. An increase in short bonds, resulting from exchanging long bonds, increases the riskiness of long bonds and raises their real rate of return....

The effects of open market operations and long versus short bond financing on risk in financial markets in a stochastically growing economy are studied. An increase in short bonds, resulting from exchanging long bonds, increases the riskiness of long bonds and raises their real rate of return....

Optimal tax and monetary policies in a stochastic monetary growth model are investigated. Our findings are of three general types. First, both capital income taxes and monetary growth are shown to influence the economy through effective risk adjusted measures, expressed as a linear function of...

The class of growth models that incorporate nonrivalry and/or externalities implies that the size (scale) of an economy influences its growth rate. Ample empirical evidence exists to suggest that such implied scale effects are counter-factual. The objective of this paper is to develop a general...

Optimal tax and monetary policies in a stochastic monetary growth model are investigated. Our findings are of three general types. First, both capital income taxes and monetary growth are shown to influence the economy through effective risk adjusted measures, expressed as a linear function of...