Barro's model is an AK model, and there cannot be dynamic inefficiency since the social yield of the capital is higher than the growth rate. But it may be that the private yield and thus the interest rate are lower than the growth rate. One can thus have a Ponzi game and the government can allow...

The paradoxes of Lucas and Romer relate to the theoretical coherence of the international differences in productivity of the factors of production. To solve these paradoxes, the assumption of externality of the physical capital seems better than the assumption of externality of the human capital...

Buiter (1981) illustrates that in the OLG model, the ranking of stationary utility levels under autarky and openness, is ambiguous. We show that both countries increase their stationary utility levels only if the autarky capital-labor ratios are on opposite sides of the golden rule

Whether public debt is internal or external, the burden is equivalent in the OLG model. This equivalence holds, regardless of whether the definition of burden reflects Modigliani's view or Lerner's perspective. It results from the assumption of perfect substitutability between public debt and...

Gourinchas and Jeanne (2006) explain that the gains from capital market integration are small because the natural convergence of economies would have "done the work" of integration if it had not occurred. We provide a simple illustration of this standard theoretical argument using the simplest...

In this didactical exercice we show that the long run welfare gains from international financial integration differ when using the Solow model vis-à-vis the Ramsey model. While the former predicts beneficial effects of financial integration on the wealth and consumption of a poor country...

In the representative agent model, at steady state, all the agents must have the same time preference but ants and grasshopper haven't. It is shown that individuals having a weak potentiality of physical capital accumulation (i.e. a strong impatience) can have the same growth rate as other...

Barro's model (1990), for purposes of simplification, assumes that producers internalize the learning by doing generated by capital. One consequence is that the price of capital is higher and the price of labor lower than the price of perfect competition which does not internalize the learning...

Capital (physical and human) doesn't flow from rich to poor countries. We show that in order to solve these twin paradoxes, assumption of externality of physical capital is better than assumption of externality of human capital