nep-dge New Economics Papers
on Dynamic General Equilibrium
Issue of 2007‒02‒03
four papers chosen by
Christian Zimmermann
University of Connecticut

  1. Growth and Welfare Effects of Stabilizing Innovation Cycles By Marta Aloi; Laurence Lasselle
  2. Aggregate Shocks or Aggregate Information? Costly Information and Business Cycle Comovement By Laura Veldkamp; Justin Wolfers
  3. Savings and Investment Correlations in Response to Monetary Policy Shocks: New Insights into the Feldstein-Horioka Puzzle? By Caroline Schmidt
  4. Income Dispersion, Asymmetric Information and Fluctuations in Market Efficiency By Laura Veldkamp; Chris Edmond

  1. By: Marta Aloi; Laurence Lasselle
    Abstract: We consider a simple model of innovation where equilibrium cycles may arise and show that, whenever actual capital accumulation falls below its balanced growth path, subsidizing innovators by taxing consumers has stabilizing effects, promotes sustained growth and increases welfare. Further, if the steady state is unstable under laissez faire, the introduction of the subsidy can make the steady state stable. Such a policy has beneficial effects as it fosters output growth along the transitional adjustment path, and increases the welfare of current and future generations.
    Keywords: Growth, endogenous cycles, stabilization, innovation, subsidy, welfare.
    JEL: E62 H32 O41
    Date: 2007–01
  2. By: Laura Veldkamp; Justin Wolfers
    Date: 2006
  3. By: Caroline Schmidt (KOF, Swiss Institute of Business Cycle Research, ETH Zurich)
    Abstract: In this paper, it is argued that the observed high positive correlation between national savings and investment which is found in the data can in part be explained by shocks to monetary policy. This hypothesis, which is established by reviewing some empirical .ndings, is tested in a two-country DSGE-model framework in the tradition of the New Open Economy Macroeconomics. The simulation results obtained support the idea that shocks to monetary policy might contribute to the explanation of the Feldstein-Horioka puzzle.
    Keywords: Savings Investment Correlations,Monetary Policy Shocks, Feldstein- Horioka Puzzle, Local-currency pricing; Investment Correlations,Monetary Policy Shocks, Feldstein- Horioka Puzzle, Local-currency pricing
    JEL: E2 E52 F32
    Date: 2006–08
  4. By: Laura Veldkamp; Chris Edmond
    Date: 2006

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