In this paper we are concerned with the equilibrium dynamics of a two-sector model of endogenous growth with distortionary taxes. We show that for certain parameters values and tax schemes every equilibrium orbit--except the steady state solution--is non-interior; i.e., there are times in which...

In this paper we analyze the rate of convergence to a balanced path in a class of endogenous growth models with physical and human capital. We show that such rate depends locally on the technological parameters of the model, but does not depend on those parameters related to preferences. These...

Recent research has focused on the dynamics of the Lucas-Uzawa model of endogenous growth (e.g., Caballé-Santos (1993), Chamley (1993) and Faig (1993)). This model allows for permanent growth of both consumption and investment, propelled by a human capital technology. In contrast to the...

In this paper we present an endogenous growth model with physical and human capital accumulation and study the effects of labor and capital income taxation on the transitional dynamics to the balanced path. Our results amount to an extension of those in Caball\'{e} and Santos (1993) and offer...

This paper analyzes the effect of having a large gap in firing costs between permanent and temporary workers in a dual labour market on TFP development at the firm level. We propose a simple model showing that, under plausible conditions, both temporary workers' effort and firms' temp-to-perm...

This paper assesses the optimality of U.S. fiscal policy from 1960 to 2010. With this purpose, we present a tractable neoclassical economy with a benevolent government and characterize time-consistent, optimal fiscal policy. We then compare the model's prescriptions for income tax rates and...

We study optimal time-consistent fiscal policy in a neoclassical economy with endogenous government spending, physical capital and public debt. We show that a dynamic complementarity between the households’ consumption-savings decision and the government’s policy decision gives rise to a...