The dollarization of bank deposits and credit is widespread in developing countries, resulting in varying degrees of currency mismatches in domestic financial intermediation. It is argued that flexible exchange rate regimes generally encourage banks to match dollar-denominated liabilities with a...

We use a simple growth model with public capital to examine the evolution of the US macroeconomy and to discuss the implications of the public infrastructure decline for the productivity slowdown over the last four decades. The main difference of the model to other papers in the related...

Technology adoption in follower countries can be accomplished by local R&D activities, but it can also be achieved without formal R&D, for example, by foreign direct investment. Empirical evidence suggests that current R&D activities often expand local knowledge for future R&D, while adoption...

Transparency has become one of the key features of monetary policy. This paper analyzes the reputational incentives related to transparency, focusing on the publication of central bank forecasts. A simple dynamic monetary policy game shows how transparency reduces inflation, as has been found...

This paper employs a stochastic endogenous growth model with productive government expenditure to analyze the macroeconomic effects of income taxation. We demonstrate that in the presence of capital and income risk the impact of taxation on consumption choice as well as on economic growth is...

This paper examines income convergence across U.S. regions for the period 1929-2002 using unit root and cointegration techniques. The findings suggest it is difficult to reject non-convergence in per capita incomes across regions even when endogenous breakpoints are included. Interestingly, we...

This paper examines the effect of vertical diversity in workers' skill on the long-run growth rate of an economy. It uses a two-sector model where the technology of the consumption-good sector is supermodular and that of the R&D sector is submodular. By adopting Grossman and Maggi's (2000) model...

An economy is considered in which new firms require time to learn whether they will grow in size and profitability in the long run. The labor market is imperfectly competitive. I show that inefficient levels of firm entry will generally exist. Whether under or over entry occurs is tightly...

This paper evaluates the welfare consequences of implementing intellectual property rights in developing countries. The protection of intellectual property in poor countries promises to increase world innovation, but this would not come without costs. Higher prices for consumers in that part of...

The market solution of a general R&D-based endogenous growth model is developed. The model is general in two respects: First, general formulations are used and restrictions are only introduced provided that these become necessary. Second, each factor of production (labour, capital and...