We present a tractable model of the effects of nonfinancial risk on intertemporal choice. Our purpose is to provide a simple framework that can be adopted in fields like representative-agent macroeconomics, corporate finance, or political economy, where most modelers have chosen not to...

Labor taxes and unemployment compensation were blamed for causing relative declines in labor supply in the EU to the US in the past decades. We propose a model with an endogenous labor force and compare with the model with an exogenous labor force. Because of discouraging the labor force, labor...

Discussion has been made concerning the pros and cons of financing public projects via either earmarking or a general fund. The article studies the desirability of earmarked and general fund financing based on economic stabilization in a two-sector growth model. Regardless of the nature of...

This paper investigates whether the external consumption habit can be a source of indeterminacy in a one-sector growth model when the labor supply is elastic. When there is a proper habit effect with a positive intertemporal elasticity of substitution, we find that the model exhibits...

This paper considers the impact of leisure preference and leisure externalities on growth and labor supply in a Lucas (1988) [12] type model, as in Gómez (2008) [7], with a separable non-homothetic utility and the assumption that physical and human capital are both necessary inputs in both the...

Evidence indicates that consumer durables are more flexibly priced than nondurable goods and services. In otherwise standard two-sector neoclassical sticky-price models with flexible durable prices, following monetary tightening, nondurables decrease but consumer durables increase. Friction in...

This paper integrates tax evasion into a standard AK growth model with public capital. In the model, the government optimizes the tax rate, while individuals optimize tax evasion. It studies tax rate, tax evasion and economic growth, and compares them with otherwise identical economies except...