One of the central hypotheses of the neoclassical growth literature is the balanced- growth hypothesis, which predicts that output, consumption, and investment grow at the same rate. Empirically, this implies that the consumption-to-output ratio and the investment-to-output ratio must be...

In an R&D-driven growth model with asymmetric fundamentals the steady state equilibrium R&D investments are industry-specific and they are such that R&D returns are equalized across industries. Return equalization, however, makes investors indifferent as to where to target research and, hence,...

This paper proposes a textual analysis of Marshall’s theory of firm pricing behavior under competitive conditions. It considers to what extent average cost and marginal cost pricing rules characterize Marshall’s competitive partial equilibrium, and it shows that the two rules differ for...

We extend the class of quality-ladder growth models (Grossman- Helpman (1991), Segerstrom (1998) and others), to encompass an economy with asymmetric fundamentals. In contrast to the standard framework, in our model industries may di¤er in terms of their innovative potential (quality jumps and...

It is often argued that rigid labour market and centralized bargaining are harmful employment and growth. This paper looks at the case of Nordic countries as a counter-example pointing to some weaknesses of this view. Rigid labour markets, while reducing the offer of low quality jobs, increase...

Intrinsically trustworthy agents never cheat. A society's willingness to trust and the quality of its institutions have their origins in the intrinsic trustworthiness of its citizens. Trustworthiness is the basis for maximizing output in economic exchange and in explaining differences in...

The instrumental variables strategy is commonly employed in empirical research. For correct inference using this econometric technique, the instruments must be perfectly exogenous and relevant. In fact, the standard t-ratio test statistic used in this context yields unreliable and often...

This paper introduces endogenous capital income tax rates as in Schmitt-Grohe and Uribe (1997), into the overlapping generations model with endogenous labor and consumption in both periods of life (e.g., Cazzavillan and Pintus, 2004). In contrast with the previous result that the existence of...

Israel’s policies regarding Lebanon have been dependent on public opinion, which is very volatile. The citizens of Israel did not favor the occupation of the security zone in South Lebanon because of the Four Mothers movement, and it influenced the government to withdraw military forces...

This research attempts a theoretical and quantitative analysis of authoritarian regimes enduring in the developing countries. We attempt computer visualization of the model developed by Acemoglu and Robinson in order to derive an empirical hypothesis easily. There is a reason for us to accept...