This paper argues that relying on major policy distortions to create a domestic automotive industry through import substitution generates significant costs for the economy, in terms of foregone output, lower consumption, and reduced overall welfare. To bring this issue into sharp relief, the...

This paper develops a full-employment theory of the business cycle in the context of a simple equilibrium dynamic monetary model with complete information, overlapping generations and production processes. This theory is founded on three basic notions: (a) economic agents plan to limit their own...

This paper presents a structural monetary framework featuring a demand function for non-monetary uses of gold, such as the one drawn by Barsky and Summers in their 1988 analysis of the Gibson paradox as a natural concomitant of the gold standard period. That structural model is subject to...

This paper argues that relying on major policy distortions to create a domestic automotive industry through import substitution generates significant costs for the economy, in terms of foregone output, lower consumption, and reduced overall welfare. To bring this issue into sharp relief, the...

This paper analyses an overlapping generations model with absolute bequest motive. It is shown that the widely accepted criterion to verify dynamic efficiency does not apply to this case. In our model the social planner maximizes welfare by choosing a capital stock larger than the golden rule...