While most of the literature explaining the change in consumption composition has focused on the role of relative prices and non-homothetic preferences, this paper examines the importance of preference shifts. I introduce dynamics in preferences and find that they play a relevant role and that...

This paper studies the effects of educational borrowing constraints on economic growth and welfare. We consider a three-period-lived overlapping generations model in which individuals finance their educational expenditures by borrowing. We show that if the elasticity of human capital to...

This paper examines the impact of financial stress on labour productivity in two broad sectors: production and market services. The results indicate that, while both sectors are affected by financial stress, the channels through which this happens differ.

Recent evidence shows that factor shares are not constant. Consequently, growth accounting exercises rely on a false assumption and a measurement problem arises. We propose an empirical methodology to solve the measurement issue and estimate TFP growth.

I estimate a Solow model augmented with human capital in 42 countries for 1910–2000. Estimated TFP growth is 0.3%/year, and the steady-state rate for GDP/capita is 1.0%/year. Implicitly for high-income countries maintaining growth above this rate will be increasingly difficult.

This paper theoretically investigates the effect of population aging on the employment share of an elder care service industry. We show that there exists the threshold level of income elasticity of demand for the elder care service, above which population aging spurs economic growth. In a closed...

In a broad panel over the period 1970–2000 we find that approximately 40% of the international variation in capital per worker is accounted for by the cross-country variance in the relative price of capital.

This paper explores some implications of the comparison between feedback Nash and Stackelberg equilibria for growth and welfare in a ‘voracity’ model. We show that, as compared to the Nash equilibrium, the Stackelberg equilibrium involves a lower growth rate, while it leaves both the leaders...

In a Barro-type economy with exogenous consumption aspirations, raising income taxes favors growth even in the presence of lump-sum taxes. Such a policy is compatible with the behavior of private consumption, income taxes and growth rates observed in actual economies.

We show that the specification of technology differences in recent empirical studies of trade is not supported by basic growth theory and may lead to biased estimates of the pattern of specialization and trade.