Using ideas from the endogenous growth literature, we present a model of the endogenous determination of productivity growth based on individual worker decisions about human capital investment. We calibrate a version of the model to match long run growth facts from the US and study the business cycle properties of this model. This approach offers improvements along several dimensions over stand...

I establish a theoretical framework to address three distinct, but interrelated puzzles in international economics: (1) the occurrence of twin crises, (2) the existence of large amounts of sovereign debt, and (3) the presence of substantial amounts of international reserves. By considering the interaction between growth and banking in a small open economy that is unable to commit to repaying it...

This paper considers leisure externalities in a Lucas (1988) type model in which physical and human capital are necessary inputs in both sectors. In spite of a non-concave utility, the balanced growth path is always unique in our model which guarantees global stability for comparative-static exercises. We analyze and quantify the effects of preferences toward leisure on labor supply and welfare...

We study a simple model based upon the Lucas framework where heterogeneous agents behave rationally in a fully intertemporal setting but do not know other investors’ personal preferences, wealth or investment portfolios. As a consequence, agents initially do not know the equilibrium asset pricing function and must make guesses which they update via adaptive learning with constant gain. We demon...

The general idea of this paper, Woodford [1], is to abandon the Phelps-Lucas model for the Phelps-Woodford model. We know that the Phelps-Lucas idea is that real e¤ects of nominal disturbances arise because of assumed imperfect information about these disturbances. But the standard Lucas formulation of this results in too little persistence of these real e¤ects. Mike suggests a more elaborate i...