In view of the large scale of the nonmarket home sector in both developed and developing economies, in this paper we construct an open economy model with home production. We discuss both long-run and short-run impacts of fiscal policies such as income tax, consumption tax and government spending...

Lucas (1988) recognized that trading new goods is of paramount importance to endogenous growth. At the foundation of the trade pattern in the growing world economy today, there is a basic asymmetry. Developing countries usually find it difficult to start a socially desirable industry, where the...