In this paper, we present an overlapping generations model where individuals accumulate human capital through formal schooling. We model the role of the public sector in schooling as one of collecting taxes from households and providing inputs to the learning technology. Public expenditures on schools are determined endogenously. Under plausible restrictions, our model's predictions qualitative...

abstract t he return of capital is fundamental to the intertemporal allocation of resources by changing the consumption behavior and capital accumulation over time. taxation on return of capital increases the marginal product of capital, meaning that capital stock is lower than when capital is not taxed, which results decreased growth and welfare in steady state. this paper studies the impact o...

 Outward-oriented economies seem to grow faster than inward-looking ones. Does the literature on convergence have anything to say on this? In the dynamic Heckscher-Ohlin-Samuelson model, with factor-price equalization, there is no convergence of incomes. This is because with identical preferences and return to capital, irrespective of initial levels the growth rates of consumption are the same....

This paper combines technology adoption with capital accumulation taking into account technological progress. We model this as a multi-stage optimal control problem and solve it using the corresponding maximum principle. The model with linear revenue can be solved analytically, while the model with market power is solved numerically. We obtain that investment jumps upwards right at the moment t...

The papers in this symposium address the issue of multiple equilibria that can be induced by monetary policy in models with capital accumulation. In particular they examine how the “Taylor Principle”, under which interest rates respond more than proportionately to increases in inflation, can generate multiple equilibria. They also explore the design of policies to avoid the problem of multiple ...

This paper addresses the importance of tow public policies that commonly compete for government’s budget: schooling and policing. By means of a contest game, I discuss the individual decision to accumulate violence-related skills at the expense of human capital formation, in a setting where property rights require private e¤orts to be enforced. Additionally, I explore the existence of an optima...

We consider the optimal sequential irreversible investment policy of a value maximizing firm facing decreasing returns to scale and interest rate uncertainty. We characterize the optimal accumulation policy and its value for a broad class of interest rate models by focusing on the marginal investment decision and deriving the marginal value of capital. We also state a set of conditions under wh...

The relation between economic growth and military resource allocations is complex. On the one hand, more rapid growth and a larger gross domestic product (GDP) increases resources available for military spending. On the other hand, larger allocations for military purposes may slow economic growth, to the extent that such allocations reduce non-military capital formation. Moreover, the scale of ...

A Schumpeterian growth model is constructed for an economy where wages are determined by union-firm bargaining. It is shown that the economy is subject to cycles in which capital, output and employment vary in fixed proportion. These increase through saving and capital accumulation until a new technology is introduced, at which moment they fall sharply due to obsolescence of capital. The labour...

The papers in this symposium address the issue of multiple equilibria that can be induced by monetary policy in models with capital accumulation. In particular they examine how the “Taylor Principle,” under which interest rates respond more than proportionately to increases in inflation, can generate multiple equilibria. They also explore the design of policies to avoid the problem of multiple ...