Kazuo Mino

Nonlinear strategies in dynamic duopolistic competition with sticky prices

Abstract We discuss nonlinear strategies in an infinite horizon duopoly game with sticky prices where firms maximize their discounted sum of profit. We construct a stationary feedback equilibrium without guessing value functions and feedback strategies that solve the Hamilton-Jacobi equation. For this purpose, we study the auxiliary equation that is derived from the Hamilton-Jacobi equation. We show that the domain of the state space plays an crucial role in characterizing feedback equilibria, and discuss several implications of this observation. In particular, we find that when the upper bound of the state space is not very high, previously unknown feedback equilibria emerge.

Analysis of a Two-Sector Model of Endogenous Growth with Capital Income Taxation

This paper addresses a two-sector model of endogenous growth in which one sector produces final goods and the other produces new human capital. Both sectors employ human as well as physical capital under constant returns to scale technologies. Unlike existing studies of this type of model that have mostly concentrated on steady-state analysis or on numerical simulations of calibrated models, this paper presents an analytical argument concerning the dynamic behavior of the growth path and the effects of capital income taxation in and out of the steady-growth equilibrium. It is demonstrated that the dynamic behavior of the economy and some policy effects depend heavily upon the magnitude of factor intensity used in each production sector. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Indeterminacy and Endogenous Growth with Social Constant Returns

By examining endogenous growth models with physical and human capital, this paper demonstrates that indeterminacy of equilibrium may emerge even in the absence of increasing returns to scale. The model we examine consists of two production sectors: one produces final goods and the other produces new human capital. Both sectors use physical as well as human capital. It is assumed that while the private technology of the representative firm in each sector exhibits decreasing returns to scale, the social technologies of both sectors satisfy constant returns because of the presence of sector-specific externalities. We demonstrate that a small divergence between private and social factor intensity conditions generates indeterminacy of equilibrium rather easily even under constant returns. Intuitive implications of the source of indeterminacy and a generalization of the model are also presented. Journal of Economic Literature, Classification Numbers: D90, O40, O41.

Monetary Policy, Overlapping Generations, and Patterns of Growth

This paper investigates the role of monetary policy in economic growth. Using an infinitely lived overlapping-generations model with a simple convex technology that can yield endogenous growth, the authors show that money supply behavior of the government may have significant effects on the long-run economic growth. In addition to the effect on the long-term growth rate of the economy, the policy may determine whether the economy stays in the exogenous growth process restricted by the growth rate of labor supply or realizes the endogenous growth that sustains continuous growth of per capita income and consumption. Copyright 1995 by The London School of Economics and Political Science.

Long-Run Effects of Monetary Expansion in a Two-Sector Model of Endogenous Growth

Abstract This paper explores the long-run effects of monetary expansion by introducing a cash-in-advance constraint into one of the basic models of endogenous growth. In our model, the real side of the economy consists of two production sectors, one of which produces a final good that can be used either for consumption or for investment and the other produces new human capital. Both sectors use physical and human capital under constant returns to scale technologies. We first characterize the balanced-growth equilibrium and then examine how a rise in money growth affects the relevant variables, such as the long-term growth rate and the relative prices.

Non-separable utility function and indeterminacy of equilibrium in a model with human capital

Abstract This paper shows that non-separability of utility function may produce indeterminacy of equilibrium in the representative agent models with labor leisure choice. By using a two-sector model of endogenous growth, we show that if the utility function is not additively separable between consumption and leisure, indeterminacy may emerge even in the absence of external increasing returns.

Growth and Bubbles with Consumption Externalities

This paper explores the role of consumption externalities in an overlapping generations economy with capital accumulation. If consumers in each generation are concerned with other agents f consumption behaviors, there exist intergenerational as well as intragenerational consumption externalities. It is the presence of intergenreational consumption externalities that may produce fundamental effects both on equilibrium dynamics and on steady-state characterization of the economy. This paper demonstrates this fact in the context of a simple model of endogenously growing, overlapping-generations economy with or without asset bubbles.

Optimal taxation in dynamic economies with increasing returns

This paper studies optimal taxation in dynamic economies with increasing returns. We show that if there exists a stable open-loop Stackelberg equilibrium, the optimal rate of tax on capital income in the steady state is negative in order to eliminate the wedge between the private and the social rate of return to capital. This result also holds when the government expenditure has a positive effect on production activities of the private agents. In contrast, if the government takes a feedback strategy and if the government budget is balanced in every period, then the optimal capital income taxation rule obtained under the open-loop strategy may be violated. It is, however, shown that if the government can borrow from the public, the negative capital income tax rule may be established even under the feedback policy rule.

Technology, Preference Structure, and the Growth Effect of Money Supply

This paper studies the growth effect of money supply in the presence of increasing returns and endogenous labor supply. By using a simple model of endogenous growth with a cash-in-advance constraint, it is shown that the growth effect of money supply depends on the specifications of preference structures as well as on the production technology. Either if the production technology exhibits strong non-convexity or if the utility function has a high elasticity of intertemporal substitution, then there may exist dual balanced-growth equilibria and the impact of a change in money growth depends on which steady state is realized in the long run. It is also shown that there is no systematic relationship between the growth effect of money supply and local determinacy of the balanced growth path.

Growth and Welfare Effects of Monetary Expansion in an Overlapping‐generations Economy

This paper studies the relation between money supply and the long-run economic growth in the context of an endogenous growth model with overlapping generations. We present detailed analyses of growth and welfare effects of monetary expansion under alternative money supply rules. It is shown that, although monetary expansion has a growth-enhancing effect in the long run, in general it is not a Pareto-improving policy. We also pay much attention to the presence of multiple equilbria in endogenous money supply regimes.