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The book revisits the subject matter of macroeconomic theory in a two-sector disequilibrium model inspired by the structural theories of the business cycle developed by Tugan-Baranowski, Aftalion, Fanno, and Lowe. The functioning of each market is modeled following Hicks: the features of each market depend on the characteristics of the goods traded. In this framework, endogenous irregular business cycles arise. The issues of the impact of technical progress and the effectiveness of a stabilizing fiscal policy are thoroughly discussed. The book concludes with a discussion of all of these problems in a case of open economy

This paper investigates the mechanics through which wealth may, in the long run, trickle down from the rich to the poor. In the presence of indivisibilities in investment of human capital and impossibility of borrowing money, investment in education is financed through an intergenerational transfer. In an OLG model where aggregate production requires capital and both skilled and unskilled labour, it is shown that the long run equilibrium outcome depends on the values of few key parameters. A complete characterisation of the steady state is provided. Under some configurations of the parameter values a unique invariant equilibrium exists where inequality vanishes asymptotically. Under others, multiple equilibria exist and the equilibrium outcome crucially depends on the initial conditions of the system. These equilibria are characterised by an negative relationship between inequality and economic development.

We propose a simple model where large innovation waves arise from the endogenous propagation of information around sectors. Innovators of each sector invest in internal R&D and in local search for information. We show that depending on the structural parameters of the single sectors, some of the R&D sectors will engage in local search while others will not. Through localised search for information, technology adopted in certain sectors can be adopted also in other sectors, leading to a large technological correlation, and eventually to long ranged innovation waves. We characterise the endogenous balanced growth path of the economy, and the short run fluctuations around it. The model predicts a linear, positive relationship between the short run fluctuations and the long run growth rate. We test this latter relationship and find that we cannot reject the predictions of the model.

In this paper a two-sector dynamic model of business fluctuations is presented. It is a disequilibrium dynamic model with two laws of evolution (dynamic laws) built into it: prices of commodities change according to the market disequilibrium of supply and demand, while quantities change according to the stock disequilibrium and the shifting of the degree of utilization of productive capacity away from its target value. Investment by firms is modelled by a nonlinear accelerator. Non linearity in the investment function makes the equilibria of the model unstable and causes growing disproportionalities between the two sectors; business fluctuations are the outcome of the switching of the system to a different regime that allows to reduce the existing disproportionality. The different regimes into which the economy may be found are a situation of overheating and one of depression. A fundamental role in the switching of the economy is played by two crucial features of the capital good sector: its limited productive capacity and the time-lag required to increase it.

The paper investigates the mechanics through which novel technological principles are developed and diffused throughout an economy consisting of a technologically heterogeneous ensemble of firms. In the model entrepreneurs invest in the discovery and in the diffusion of a technological principle and their profit flow depends on how many firms adopt the innovation and on how long it takes other entrepreneurs to improve it. We show that technological convergence emerges from the competition among entrepreneurs for the profit flow and characterize the economy's growth rate.

The aim of this paper is to investigate the nexus between demand patterns and innovation as it stems from research efforts and the extent of specialization. In the proposed model an innovation race conducted by entrants investing in research and development against established incumbents raises productivity at the industry level and leads to a shift in the aggregate demand pattern and consequently to a redistribution of the profit fund among industries and a restructuring of the production process in each industry. The paper argues that the degree of development as reflected in a demand share distribution is characterized by a corresponding distribution of specialized sectors that becomes more even across industries as the development process proceeds and investigates the consequences in terms of economic growth.

This paper investigates the research and development activity of heterogeneous and rationally bounded firms. The latter conduct this activity through in-house research and by collecting information originating in other firms' spillovers. Thus, research and development activity owes both to independent searching and to interaction diffusing information. We study the conditions under which this idiosyncratic effort yields effects that have either local, system-wise negligible impacts or cumulate to generate significant aggregate ones. In the latter case, global effects feed back upon the incentive to innovate and therefore on the strength of local interaction as well as on autonomous research efforts. It is these dynamic forces that we model. We compare cases in which significant aggregate effects do emerge with cases in which they do not and study their outcome on innovation-directed investment and on long-term growth.

This paper studies the evolution of a network of leading firms that are engaged in an active search to improve their technological capability through interaction with knowledge-heterogeneous firms. Through the simulation of a linear model of technological spillovers we show the emergence of paradigm setters and the impact of search routines on the system's average performance