This paper presents a computable general equilibrium model of endogenous (stochastic) growth and cycles that can account for two key features of the aggregate data: balanced growth in the long-run and business cycles in the short-run. The model is built on Schumpeter's idea that economic...

This paper studies how the assumption of quasi-geometric (quasi-hyperbolic) discounting affects the individual consumption-savings behavior in the context of the standard one-sector neoclassical growth model with heterogeneous agents. The agents are subject to idiosyncratic shocks and face...

This paper studies the implications of a dynamic general equilibrium model with three production sectors, which are agriculture, industry and services. Due to the assumption of increasing returns in industry and services, our model has multiple equilibria. Two equilibria are stable: one, in...

The neoclassical growth model with quasi-geometric discounting is shown by Krusell and Smith (2000) to have multiple solutions. As a result, value-iterative methods fail to converge. The set of equilibria is however reduced if we restrict our attention to the interior (satisfying the Euler...

The paper proposes a theory of the wage arrears phenomenon in transition economies. We build on the standard one-sector neoclassical growth model. The neoclassical firms in transition make losses and use wage arrears as the survival strategy. At the agents' level, the randomness in the timing...

We use aggregation theory to investigate the link between one-consumer and multi-consumer economies under a quasi-linear class of preferences. Our study is carried out in the context of the neoclassical growth model. The quasi-linear preferences considered are additive in consumption and leisure...

We investigate the impact of preference shocks on the aggregate dynamics of the U.S. economy in the context of a neoclassical growth model derived from aggregation. The aggregation result we use is as follows: if markets are complete and if agents have identical preferences of the addilog type,...

This paper presents a two-sector growth model of international trade that can account for the key features of the postwar world development experience. Two sectors represent the traditional primitive production and the modern sophisticated production. Due to increasing returns in the modern...

This paper investigates how the assumption of quasi-geometric (hyperbolic) discounting affects the distributional implications of the standard one-sector neoclassical growth model with infinitely lived heterogeneous agents. The agents are subject to idiosyncratic shocks and face borrowing...

This paper studies the properties of the solution to the heterogeneous agents model in Den Haan et al. [2009. Computational suite of models with heterogeneous agents: incomplete markets and aggregate uncertainty. Journal of Economic Dynamics and Control, this issue]. To solve for the individual...