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In this paper we study a two-sector optimal growth model with elastic labor supply. We provide a complete characterization of the production possibility frontier in terms of the capital intensity difference accross sectors. We show that the modified golden rule is saddle-point stable when the investment good is capital intensive. On the other hand, to(More)
It is well known from the literature that the introduction of liquidity constraints in in...nite-horizon economies may be responsible for the occurrence of local indeterminacy and sunspot ‡uctuations. Yet, the question of the robustness of such phenomena when the constraints are progressively relaxed, and the possibility of intertemporal arbitrage on the(More)
The empirical relevance of indeterminacy and sunspot ‡uctuations has been often questioned on the basis of the implausibly high degrees of increasing returns to scale or unconventional calibrations for the fundamentals required. In this paper we study a one-sector economy with partial cash-in-advance constraint on consumption expenditures and show how such(More)
One of the plausible explanations for macroeconomic fluctuations relies on the occurrence of endogenous deterministic cycles. In the last three decades, most of the relevant literature has rested on the assumption of a representative agent but, recently, a few papers have investigated the role of consumers’ heterogeneity on endogenous fluctuations. Our(More)
Existing literature continues to be unable to offer a convincing explanation for the volatility of the stochastic discount factor in real world data. Our work provides such an explanation. We do not rely on frictions, market incompleteness or transactions costs of any kind. Instead, we modify a simple stochastic representative agent model by allowing for(More)
The purpose of the model developed in the paper is to provide a simple economic framework to address an economic policy question, namely the optimal size of military R&D investment within total public expenditures. To capture the long-run impact of military R&D on the growth rate of the economy, one develops an endogenous growth model in line with Barro(More)
0347-01). We would like to thank Carine Nourry and participants of the workshop "Growth with Heterogeneous Agents: Causes and Eects of Inequality" held in Marseille on June 16-17, 2008, for helpful comments. All remaining errors or omissions are our own. Abstract The aim of this paper is to study the role of progressive tax rules on the allocations of(More)
Several contributions have already pointed out that initial wealth inequalities do persist in the long run in the Ramsey model with heteroge-nous agents. We show that this result is not robust to the introduction of endogenous fertility. Our argument builds on the Barro-Becker (1989) seminal model extended to allow for heterogenous agents with different(More)