Three essays on economic growth

A number of recent papers have investigated the growth effects of flat rate taxes in the context of standard neoclassical growth models where growth is due to human capital accumulation. Chapter 1 argues that this problem should be reconsidered in an overlapping generations framework. Modeling agents as infinitely lived obscures an important asymmetry between human and physical capital. A multiperiod overlapping generations model is solved numerically to show that such growth effects are small. In contrast to the previous literature, this result is remarkably robust to parameter changes. Chapter 2 investigates how the presence of human capital alters the welfare implications of various taxation schemes. A calibrated overlapping generations model is solved for transition paths under rational expectations. It is shown that including human capital changes the predicted welfare gains only marginally, if long-run growth is considered exogenous. However, even small changes in long-run growth rates have the potential to dominate welfare changes after moderate periods of time. Chapter 3 offers a model of technology adoption and learning to account for the cross-country correlations between growth rates and various equipment investment related variables. It is shown that countries facing lower prices of imported equipment experience faster long-run growth. The predicted growth differentials are consistent with cross-country observations