We introduce endogenous directed technical change into integrated climate policy assessment. Our model builds on state-of-the-art theory as well as econometric data. We apply our model to the assessment of a carbon budget based climate policy. Motivated by the announcement of international transfers during recent climate policy negotiations, we vary the begin of endogenous international transfe...

In this paper, using a production framework in which skilled and unskilled labor are imperfect substitutes, I analyze the time paths of the efficiencies of skilled and unskilled labor and their implications for economic growth and wage inequality in the US between 1950 and 2005. There are two main findings. First, I find that skilled labor efficiency has grown more slowly since the mid 1970s. S...

TFP Growth in British and German Manufacturing, 1950−96* This Paper considers the accuracy of traditional TFP growth estimates using an econometric methodology which takes account of scale economies, fixed factors of production and adjustment costs to reveal underlying ‘pure technological change’. The results suggest that these biases vary substantially over time but do not impact heavily on An...

In this paper we report the results from a detailed investigation of the shifts of the world production frontier function over the period 1980-2010. Analogous to a radar we implement a novel measurement approach for these shifts using nonparametrically computed productivity measures to scan the frontier shifts across the entire input-output space. The shifts of the frontier function measured in...

It is widely argued that declining fertility slows the pace of economic growth through its negative effect on labor supply. There are, however, theoretical arguments suggesting that the effect of falling fertility on effective labor supply can be offset by the associated behavioral changes. We formalize these arguments by setting forth a dynamic consumer optimization model that incorporates end...

This paper evaluates the impact of global external rebalancing on Developing Asia and the rest of the world using a multi-country multi-sector quantitative model of production and trade. Developing Asia countries currently running a trade surplus (such as People’s Republic of China or Malaysia) see a substantial rise in relative wages and an appreciation in the real exchange rate. They also see...

Empirical attempts to measure the speed of convergence -the rate at which a country's per capita income approaches its steady state relative to its distance from its steady state -have started from the assumption that it is constant. In contrast, neoclassical models of capital accumulation usually predict that the speed of convergence decreases as income approaches its steady state. Estimating ...

Aphorisms that “rising tides raise all boats” or that material advances of the rich eventually “trickle down” to the poor are really maxims regarding the nature of stochastic processes that underlay the income/wellbeing paths of groups of individuals. This paper looks at the implications for the empirical analysis of wellbeing of conventional assumptions regarding such processes which are emplo...

5 Using novel estimates of sectoral total factor productivities for 72 countries across 5 6 decades we provide evidence of relative productivity convergence: productivity grew 7 systematically faster in initially relatively less productive sectors. These changes have 8 had a significant impact on trade volumes and patterns, and a non-negligible welfare 9 impact. Had productivity in each country...

We construct a variant of the neoclassical model with endogenous entry and operation decisions by …rms. The model is calibrated to match key features of the distribution of …rms, by age and by size, for the U.S. A higher entry cost leads to a higher degree of misallocation of productive factors across …rms, lower TFP, and lower output. In the data entry costs average 58 percent of per capita GD...