Adjustment costs and investment in a stochastic endogenous growth model

Article Abstract:

A stochastic equilibrium macro model which presents the concept of costly investment is described. Results indicate that an increase in the tax rate applied to the deterministic component of income from capital reduces the growth rate and increases its variance. Moreover, an increase in the mean rate of government spending has no effect on the mean growth rate or its variance, even though an increase in the variance of expenditure policy encourages growth.

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Optimal government finance policy and exchange rate management in a stochastically growing open economy

Article Abstract:

Optimal monetary policy must focus on an optimal interest rate. This rate is ascertained by comparing the marginal gains of a higher interest rate on increased growth and the resulting future consumption, with the marginal losses arising from a reduction in the holdings of real money balance. Results further show that properly scheduled monetary growth rate eliminates the need for constant foreign exchange intervention.

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Fiscal policy, elastic labor supply and endogenous growth

Article Abstract:

An analysis is developed of endogenous labor supply and its implications for fiscal policy.

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