Suchergebnisse

The Covid-19 crisis has lead to a reduction in the demand and supply of sectors that produce goods that need social interaction to be produced or consumed. We interpret the Covid-19 shock as a shock that reduces utility stemming from 'social' goods in a two-sector economy with incomplete markets. We compare the advantages of lump-sum transfers versus a credit policy. For the same path of government debt, transfers are preferable when debt limits are tight, whereas credit policy is preferable when they are slack. A credit policy has the advantage of targeting fiscal resources toward agents that matter most for stabilizing demand. We illustrate this result with a calibrated model. We discuss various shortcomings and possible extensions to the model.

Abstract
The relationship between economic growth and environmental degradation has been central to the debate over sustainable growth. This paper uses utility growth as an index of sustainable growth, which is positively related to economic growth and negatively related to environmental degradation. Skilled and unskilled labor are used in this economy and the population is growing over time generating growth without scale effects. The pollution growth rate is higher in a decentralized economy, whereas the sustainable growth rate is higher in an economy with a social planner. An increased rate of population growth is associated with a higher sustainable growth rate in both economies. A higher share of skilled labor is associated with a higher sustainable growth rate in a decentralized economy, while the effect of a higher share of skilled labor is ambiguous in an economy with a social planner.