This paper investigates the impact of low fertility on long-term capital accumulation and economic welfare. We find that the impact differs according to whether the low fertility arises from a decrease in the intensive or extensive margin of fertility. We show that an increase in the intensive...

This study augments a second-generation Schumpeterian growth model to employ human capital explicitly. We clarify the general-equilibrium interactions of subsidy policies to R&D and human capital accumulation in a unified framework. Despite a standard intuition that subsidizing these...

We provide two ways to reconcile small values of the intertemporal elasticity of substitution (IES) that range between 0.35 and 0.5 with empirical evidence that the IES is large. This is done using a model in which all agents have identical preferences and the same access to asset markets. We...

This paper explores a dynamic two-country model with production externalities in which capital goods are not traded and international lending and borrowing are allowed. Unlike the integrated world economy model based on the Heckscher-Ohlin setting, our model yields indeterminacy of equilibrium...

This paper shows that income convergence in an open-economy setting hinges upon how the time-discount rate of the households is determined. As opposed to the case of constant time-discount rate where cross-country income divergence may emerge, the small-open economy may catch up with the rest of...

This paper constructs a dynamic two-country model with country-specific production externalities and inspects the presence of equilibrium indeterminacy under alternative trade structures. It is shown that the presence of belief?driven economic fluctuations caused by equilibrium indeterminacy is...

To understand mixed evidence provided by empirical studies for the relationship between the accumulation of public debt and economic growth, it is necessary to consider not only the crowd-out effect of public debt on economic growth but also the growth-enhancing crowd-in effect that cannot be...

We study structural change in a simple, two-sector endogenous growth model and show that the presence of commodity-specific consumption externalities can be a source of structural change. When the degrees of consumption externalities are different between different goods, the two sectors grow at...

One-sector neoclassical growth models reveal that consumption externalities lead to inefficient allocation in a steady state and indeterminate equilibrium toward the steady state only if there is a labor-leisure tradeoff. This paper shows that in a two-sector neoclassical growth model, even...

This paper explores the relation between capital accumulation and transformation of industrial structure in a small open-economy. Using a three-sector, neoclassical growth model with non-homothetic preferences, we examine dynamic behavior of the small country in the alternative trade regimes. We...